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ELH
ELH
NSX / ELH - Ellerine Holdings - Interim profit statement for the six months
ended 28 February 2007
Ellerine Holdings Limited
Registration number: 1968/013402/06
Share code: ELH
ISIN number: ZAE000022752
Interim profit statement for the six months ended 28 February 2007
- Headline earnings per share up 15,0%
- Distribution per share up 21,5%
- Operating profit up 17,3%
- Revenue up 9,6%
- Gearing at 25,8%
NATURE OF BUSINESS
Ellerine Holdings Limited is a lifestyle furniture and appliance retailer,
trading out of 1 177 outlets across South Africa and its neighbouring
countries, including Zambia. The retail divisions comprise 12 trading
brands which are well positioned to service the lower, middle and higher
income consumers in both the rural and metropolitan areas.
71,0% of total revenue is derived from goods sold on credit, which is the
core of the group`s Financial Services Division. Our centrally controlled
credit operation is based on state-of-the-art computerised credit granting
scorecard systems, supported by three call centres manned by over 300
collecting agents. In addition, both short-term and life insurance cover,
utilising the three group owned insurance licences, are offered to the
group`s credit customers.
The group offers, as part of Financial Services, short-term cash loans to
lower income consumers and operates out of 72 outlets, many of which are
housed within the group`s retail outlets.
TV installation and repair services are provided through a network of 44
outlets across South Africa and the group also manufactures high quality
furniture, predominantly for one of the major cash retail brands.
GROUP FINANCIAL REVIEW
We are pleased to report a 15,0% increase in headline earnings per share to
493,9 cents (2006 - 429,4 cents) for the six months ended February 2007.
Operating profit at R853 million increased by 17,3% and resulted in an
operating margin of 19,4%, which is a solid improvement over the previous
reporting period.
Record group revenue of R4,4 billion increased by 9,6%. Good revenue growth
of 13,5% was recorded in the Cash Divisions, while the Credit Divisions
grew revenue by 7,8%. Two trends emerged in our credit sales. Firstly, a
slowdown was experienced in the growth of the consumer credit market.
Secondly, the trend towards cash sales in the credit brands continued.
Against this background, the group nevertheless continued to successfully
develop this business and revenue from financial and other services grew by
13,0% to R757 million.
Total operating income grew by 12,3% to R2,8 billion, with gross profit
margins at 45,2% (2006 - 44,2%) and the contribution from financial
services reflecting an improvement compared to the previous period.
Debtors` costs at R281 million (2006 - R210 million) are 4,0% (2006 - 3,4%)
of the gross debtors book and have increased mainly due to the increase in
the allowance for doubtful debts in line with the increase in arrears,
which reflects the tightening credit environment. The group continues to
maintain a very prudent provisioning policy.
Operating expenses at R1,6 billion (2006 - R1,5 billion) have been well
controlled and increased by only 6,9%, inclusive of an additional R13
million over the previous period in respect of accounting for the share-
based payment incentive schemes and the straight-lining of property leases,
particularly for new leases.
In line with the group`s stated objective of using its balance sheet
efficiently and targeting a gearing ratio of around 35,0%, the group
embarked upon a share buy-back programme during the period, which it
intends to continue. Consequently, net finance costs at R54 million (2006 -
R37 million) have increased.
Trade receivables at R5,1 billion (2006 - R4,6 billion) have increased by
12,9% and remain well provisioned, with total provisions at 29,0% (2006 -
28,3%) of the gross debtors book. Inventories at R651 million (2006 - R558
million) have increased by 16,7% mainly due to the lower than expected
December trading season in the Credit Divisions and the 3,0% net increase
in furniture retail outlets. Inventory levels are expected to improve by
year-end. Despite this, total assets of R8,1 billion only increased by
2,1%, primarily as a result of more efficient financial structuring of the
insurance cash reserves and the net reduction in the deferred tax asset as
a result of profit earned by the relevant operating entities.
It should be noted that the R200 million assessed loss in 1998 for Relyant
Trading (Pty) Limited has been re-instated by SARS. This has resulted in an
increase in the deferred tax asset and a reduction in goodwill of R58
million. The R58 million will result in future cash tax savings.
With the equity base now at R5,2 billion and gearing of 25,8%, the group`s
balance sheet remains financially sound. The net asset value per share of
the group, at 4 394 cents (2006 - 3 963 cents), increased by 10,9%, despite
the increase in distributions to shareholders and the repurchase of shares
amounting to R285 million.
DIVISIONAL TRADING REVIEW
In line with the group`s strategy of maintaining a sound mix between credit
and cash sales, as well as being represented across all LSM furniture and
appliance markets, trading in all divisions during the first half of the
period under review was pleasing, particularly within the Cash Divisions.
However, since December, a slowdown in the durable goods consumer market
has been experienced. This has impacted revenues when compared to the high
base enjoyed in 2005, notably in the Credit Divisions.
The Cash Divisions, which trade out of 100 outlets (2006 - 91 outlets),
performed particularly well during the period, with the Value Retailing
Division recording an increase in revenue of 16,1% and, together with
Wetherlys, total revenue for the Cash Divisions increased by 13,5%. The
profit contribution by the Cash Divisions improved with the operating
profit at R93 million (2006 - R66 million) having increased substantially
by 40,9% and operating margins at 11,7% (2006 - 9,5%) reflecting a welcome
improvement. The increase in the number of outlets in good locations,
particularly in the Furniture City and Osiers brands, coupled with focused
marketing and merchandising initiatives have contributed to the improved
results in the division.
The Traditional and Universal Credit Divisions, which trade out of 1 077
outlets (2006 - 1 052 outlets), achieved an increase of 7,8% in revenue
over the previous period. The trend towards cash sales in the Credit
Divisions now comprise 19,1% (2006 - 17,2%) of total revenue and the
general slowdown in the demand for consumer credit, have had a negative
impact for the period under review in respect of the operating profit and
margins of those divisions. As a result the Credit Divisions recorded no
increase in operating profit at R507 million and the operating margin at
17,9% reduced by 1,4%. The increase in the division`s net assets of 14,5%,
which is somewhat higher than the rate of increase in revenue, is mainly as
a result of the 2,4% increase in the number of new outlets, the increase in
stock and debtors caused by the lower than expected December seasonal
trading period and the tightening of collections.
Revenue from Financial Services at R690 million (2006 - R611 million)
reflects a slight increase in contribution to group revenue at 15,7% (2006
- 15,3%) and operating profit at R211 million (2006 - R160 million)
represents 24,7% (2006 - 22,0%) of group profits. With the slowdown
experienced in the consumer credit environment, a greater share of the
insurance risk relating to the Traditional Division has been passed to the
re-insurers. This resulted in a reduction of the provision for unearned
insurance premiums and an increase in revenue for the group. This, together
with improved efficiencies, a broader product range and the expansion of
the Rainbow Loans short-term loan business unit has enhanced profitability
in the Financial Services Division.
RELYANT MERGER UPDATE
The final and potentially the most disruptive stage of the merger has been
completed very successfully. The Traditional Division`s credit operation
has been moved to the Centralised Collection Offices (CCO`s) which utilises
the internationally renowned Triad collection management software tools.
This now allows the group to manage risk centrally far more effectively and
will be of great value when trading under the new NCA environment. In
addition, the Triad software incorporates meaningful customer behavioural
patterns and has the capability of mining strategically important marketing
data. This key objective of the merger has been realised with little
disruption to daily operations.
THE NATIONAL CREDIT ACT (NCA)
The group is on target to successfully implement the new requirements of
the NCA and is confident that it will operate effectively in the new
environment.
OUTLOOK
The group`s strategy is to cover the entire cash and credit furniture and
appliances market to counter-balance shifts in trends. In this respect our
group is uniquely well positioned. Currently a slowdown in middle-income
brands is notable, while the lower-income brands are showing signs of an
improvement.
The slowdown in the trading rate of growth in the furniture and appliances
retail market is expected to continue for the remaining six months to
August 2007. Management, however, confidently expects earnings growth for
the full year.
DIRECTORS
Non-Executive Directors, Denzil McGlashan (Deputy Chairman) and Tom
Chalmers, retired from the Board on 16 May 2007 and 22 February 2007
respectively. The Board wishes to thank both Denzil and Tom for their
valuable counsel and contribution over the past 20 years and wish them
every success in their well-earned retirement.
The Board is pleased to announce that with effect of 16 May 2007 the
following Non-Executive Directors have been appointed, Israel Skosana,
Moshopyadi Heil, Andile Sangqu and Mpho Nkeli.
DISTRIBUTION TO ORDINARY SHAREHOLDERS
The Board has resolved to declare an interim distribution to ordinary
shareholders of 169,6 cents per share (2006 - 139,6 cents per share) which
represents an increase of 21,5%.
The following dates are applicable:
Last date to trade cum the distribution Friday, 1 June 2007
Date trading commences ex the distribution Monday, 4 June 2007
Record date Friday, 8 June 2007
Date of payment Monday, 11 June 2007
Share certificates may not be dematerialised between Monday, 4 June 2007
and Friday, 8 June 2007, both dates inclusive.
By order of the Board
Peter Pohlmann Peter Squires
Non-Executive Chairman Chief Executive Officer
21 May 2007
Registered office: Gillooly`s View Office Park, Block E, Osborne Lane,
Bedfordview, 2007
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited
Ground Floor, 70 Marshall Street, Johannesburg. PO Box 61051, Marshalltown,
2107
Auditors: Grant Thornton
Sponsors: Nedbank Capital
Non-executive directors: P J B Pohlmann (Non-executive chairman), K M
Heil#, J M Moore*, M Nkeli#, A H Sangqu#, I B Skosana#
Executive directors: P J C Squires (Chief executive officer), A F F Moca, R
A Rawlings, R B G Sinclair
German #Independent *British
CONSOLIDATED INCOME STATEMENT
6 months to February 12 months to
2007 2006 August 2006
R million R million R million
Notes Unaudited Unaudited % Change Audited
Revenue 2 4 387 4 001 9,6 7 579
Sale of merchandise 2 2 856 2 675 6,8 4 963
Cost of merchandise
sold (1 564) (1 492) 4,8 (2 745)
Gross profit 1 292 1 183 9,2 2 218
Other operating
revenue 2 1 471 1 278 15,1 2 523
Debtors costs (281) (210) 33,8 (396)
Operating expenses (1 629) (1 524) 6,9 (3 074)
Advertising (154) (136) 13,2 (244)
Depreciation and
amortisation (47) (47) - (92)
Cost of employment (829) (763) 8,7 (1 542)
Motor and delivery (111) (107) 3,7 (220)
Property expenses (236) (211) 11,8 (441)
Administration and
other expenses (252) (260) (3,1) (535)
Operating profit 853 727 17,3 1 271
Income from associate - 5 13
Impairment of
trademarks (1) - -
Insurance investment
income 37 30 23,3 62
Net finance costs (54) (37) 45,9 (79)
Interest received 24 25 (4,0) 41
Interest paid (78) (62) 25,8 (120)
Profit before
taxation 835 725 15,2 1 267
Taxation (246) (210) 17,1 (373)
Profit attributable
to ordinary
shareholders 589 515 14,4 894
Earnings per share 3 Cents Cents Cents
Attributable 493,9 429,1 15,1 743,4
Headline 493,9 429,4 15,0 741,9
Fully diluted
attributable 489,6 422,6 15,9 732,5
Fully diluted
headline 489,6 422,9 15,8 731,1
% % %
Gross profit 45,2 44,2 44,7
Operating margin 19,4 18,2 16,8
Tax rate 29,5 29,2 29,7
CONSOLIDATED BALANCE SHEET
February February August
2007 2006 2006
R million R million R million
Note Unaudited Unaudited Audited
ASSETS
Non-current assets 2 138 2 436 2 348
Property, vehicles and
equipment 384 361 379
Goodwill 766 806 824
Trademarks 311 312 312
Investment in associate - 39 -
Deferred taxation 110 187 199
Insurance financial assets 567 731 634
Current assets 5 967 5 504 5 176
Inventories 651 558 588
Trade and other receivables 4 5 139 4 552 4 457
Taxation 4 - 1
Funds at call, bank balances
and cash 173 394 130
Non-current assets classified
as held for sale - - 48
TOTAL ASSETS 8 105 7 940 7 572
EQUITY AND LIABILITIES
Shareholders` equity and
reserves 5 172 4 762 4 995
Share capital and premium 2 081 2 195 2 214
Other reserves 35 33 43
Distributable reserves 3 056 2 534 2 738
Non-current liabilities 670 687 696
Deferred taxation 214 236 239
Interest-bearing borrowings 456 451 457
Current liabilities 2 263 2 491 1 881
Trade and other payables 853 873 1 013
Current portion of
interest-bearing borrowings 1 1 1
Taxation 73 62 133
Provisions 284 264 288
Bank overdrafts and call loans 1 052 1 291 446
TOTAL EQUITY AND LIABILITIES 8 105 7 940 7 572
Net asset value per share -
cents 4 394 3 963 4 127
Current ratio 2,6 2,2 2,8
Interest-bearing debt: Equity (%) 25,8 28,3 15,5
CONSOLIDATED CASH FLOW STATEMENT
6 months to February 12 months to
2007 2006 August 2006
R million R million R million
Note Unaudited Unaudited Audited
CASH FLOWS FROM OPERATING
ACTIVITIES (222) (203) 487
Cash (absorbed by)
generated from operations (19) (84) 718
Cash generated from
operating activities 5 1 240 1 085 1 645
Working capital changes (1 259) (1 169) (927)
Increase in inventories (63) (24) (54)
Increase in trade and
other receivables (1 019) (1 065) (925)
(Decrease) increase in
trade and other payables (177) (80) 52
Insurance investment income 37 30 62
Net finance costs (54) (37) (79)
Taxation paid (186) (112) (214)
CASH FLOWS FROM INVESTING
ACTIVITIES 70 (167) (129)
Purchase of property,
vehicles and equipment (62) (77) (148)
Proceeds on disposal of
property, vehicles and
equipment 10 7 17
Decrease in investment
in associate 48 2 1
Decrease (increase) in
insurance financial assets 74 (99) 1
CASH FLOW FROM FINANCING
ACTIVITIES (411) (166) (313)
(Decrease) increase in
interest-bearing borrowings (1) (1) 5
Distributions paid (133) (173) (342)
Shares (repurchased) issued (277) 8 24
Net (decrease) increase in
cash and cash equivalents (563) (536) 45
Cash and cash equivalents
at beginning of the period (316) (361) (361)
Cash and cash equivalents
at end of the period (879) (897) (316)
Attributable cash flow
per share - cents (186,2) (169,3) 404,8
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
capital
and Other Distributable
premium reserves reserves Total
R million R million R million R million
Balance at
1 September 2005 2 195 36 2 189 4 420
Net profit for the
period 515 515
Dividends paid (173) (173)
Total (177) (177)
Treasury shares 4 4
Treasury shares sold 8 8
Share-based payments 1 1
Exchange differences on
translating foreign
operations (9) (9)
Transfer to insurance
contingency reserve 5 (5) -
Balance at 1 March 2006 2 195 33 2 534 4 762
Net profit for the
period 379 379
Dividends paid (169) (169)
Total (172) (172)
Treasury shares 3 3
Issue of shares 19 19
Treasury shares
purchased and held (3) (3)
Share-based payments 1 1
Exchange differences on
translating foreign
operations 5 5
Unrealised surpluses
arising from hedged
instruments 1 1
Transfer to insurance
contingency reserve 1 (1) -
Capital adequacy reserve
movement 1 (1) -
Transfer of revaluation
of investment properties
to non-distributable
reserves 1 (1) -
Balance at
1 September 2006 2 214 43 2 738 4 995
Net profit for the
period 589 589
Distributions paid (133) (133)
Total (139) (139)
Treasury shares 6 6
Treasury shares
purchased and held (277) (277)
Share-based payments 1 1
Exchange differences on
translating foreign
operations (3) (3)
Transfer from insurance
contingency reserve (6) 6 -
Balance at
28 February 2007 2 081 35 3 056 5 172
SEGMENT ANALYSIS
R million DIVISIONAL
Traditional* Universal Total
Retailing Retailing Credit
INCOME STATEMENT
Revenue 2007 1 444 1 394 2 838
2006 1 355 1 278 2 633
% v LY 6,6 9,1 7,8
Credit revenue 2007 1 259 1 038 2 297
2006 1 212 969 2 181
% v LY 3,9 7,1 5,3
Cash revenue 2007 185 356 541
2006 143 309 452
% v LY 29,4 15,2 19,7
Cash revenue % 2007 12,8 25,5 19,1
2006 10,6 24,2 17,2
v LY 2,2 1,3 1,9
Sale of merchandise 2007 1 053 1 057 2 110
2006 1 030 982 2 012
% v LY 2,2 7,6 4,9
Operating profit (loss) 2007 243 264 507
2006 259 249 508
% v LY (6,2) 6,0 (0,2)
Operating margin % 2007 16,8 18,9 17,9
2006 19,1 19,5 19,3
v LY (2,3) (0,6) (1,4)
Depreciation 2007 24 11 35
2006 25 8 33
% v LY (4,0) 37,5 6,1
BALANCE SHEET
Assets 2007 3 059 2 373 5 432
2006 2 802 2 041 4 843
% v LY 9,2 16,3 12,2
Liabilities 2007 (228) (258) (486)
2006 (249) (274) (523)
% v LY (8,4) (5,8) (7,1)
Net assets 2007 2 831 2 115 4 946
2006 2 553 1 767 4 320
% v LY 10,9 19,7 14,5
Cost to acquire assets 2007 18 17 35
2006 30 23 53
% v LY (40,0) (26,1) (34,0)
RESOURCES
Number of outlets 2007 633 444 1 077
2006 617 435 1 052
% v LY 2,6 2,1 2,4
Number of employees 2007 7 992 5 686 13 678
2006 8 222 5 463 13 685
% v LY (2,8) 4,1 (0,1)
Retail m2 2007 391 895 321 345 713 240
2006 382 362 316 805 699 167
% v LY 2,5 1,4 2,0
PRODUCTIVITY RATIOS
Merchandise sales:
revenue 2007 72,9 75,8 74,3
2006 76,0 76,8 76,4
v LY (3,1) (1,0) (2,1)
Revenue per outlet
(R`000) 2007 2 281 3 140 2 635
2006 2 196 2 938 2 503
% v LY 3,9 6,9 5,3
Revenue per employee
(Rands) 2007 180 681 245 164 207 486
2006 164 802 233 937 192 400
% v LY 9,6 4,8 7,8
Operating profit per
employee (Rands) 2007 30 405 46 430 37 067
2006 31 501 45 579 37 121
% v LY (3,5) 1,9 (0,1)
Revenue per m2 (Rands) 2007 3 685 4 338 3 979
2006 3 544 4 034 3 766
% v LY 4,0 7,5 5,7
m2 per outlet 2007 619 724 662
2006 620 728 665
% v LY (0,2) (0,5) (0,5)
TRADE RECEIVABLES
Gross receivables 2007 3 872 2 670 6 542
2006 3 448 2 331 5 779
% v LY 12,3 14,5 13,2
Debtors costs 2007 174 95 269
2006 129 74 203
% v LY 34,9 28,4 32,5
Debtors cost % 2007 4,5 3,6 4,1
2006 3,7 3,2 3,5
v LY 0,8 0,4 0,6
Average length of
book in
months 2007 17,5 14,5 16,1
2006 16,9 13,5 15,4
v LY 0,6 1,0 0,7
Arrears 2007 727 325 1 052
2006 535 225 760
% v LY 35,9 44,4 38,4
Arrears % 2007 18,8 12,2 16,1
2006 15,5 9,7 13,2
v LY 3,3 2,5 2,9
Collection rate % 2007 5,7 6,9 6,2
2006 5,9 7,4 6,5
v LY (0,2) (0,5) (0,3)
Deposit rate % 2007 12,9 21,5 16,4
2006 13,4 20,3 16,2
v LY (0,5) 1,2 0,2
*During 2007, the basis of allocating central Corporate service department
costs to the Traditional Retailing and Wetherleys divisions were changed.
Comparatives have been restated accordingly.
SEGMENTAL ANALYSIS (continued)
R million DIVISIONAL
Value Total
Wetherlys* Retailing Cash
INCOME STATEMENT
Revenue 2007 273 519 792
2006 251 447 698
% v LY 8,8 16,1 13,5
Credit revenue 2007 1 159 160
2006 137 137
% v LY 16,1 16,8
Cash revenue 2007 272 360 632
2006 251 310 561
% v LY 8,4 16,1 12,7
Cash revenue % 2007 99,6 69,4 79,8
2006 100,0 69,4 80,4
v LY (0,4) (0,6)
Sale of merchandise 2007 270 476 746
2006 248 415 663
% v LY 8,9 14,7 12,5
Operating profit (loss) 2007 38 55 93
2006 34 32 66
% v LY 11,8 71,9 40,9
Operating margin % 2007 13,9 10,6 11,7
2006 13,5 7,2 9,5
v LY 0,4 3,4 2,2
Depreciation 2007 2 3 5
2006 5 3 8
% v LY (60,0) (37,5)
BALANCE SHEET
Assets 2007 240 442 682
2006 176 334 510
% v LY 36,4 32,3 33,7
Liabilities 2007 (40) (159) (199)
2006 (54) (124) (178)
% v LY (25,9) 28,2 11,8
Net assets 2007 200 283 483
2006 122 210 332
% v LY 63,9 34,8 45,5
Cost to acquire assets 2007 5 7 12
2006 6 6 12
% v LY (16,7) 16,7
RESOURCES
Number of outlets 2007 27 73 100
2006 24 67 91
% v LY 12,5 9,0 9,9
Number of employees 2007 1 144 928 2 072
2006 1 065 816 1 881
% v LY 7,4 13,7 10,2
Retail m2 2007 52 581 75 967 128 548
2006 49 942 73 417 123 359
% v LY 5,3 3,5 4,2
PRODUCTIVITY RATIOS
Merchandise sales:
revenue 2007 98,9 91,7 94,2
2006 98,8 92,8 95,0
v LY 0,1 (1,1) (0,8)
Revenue per outlet
(R`000) 2007 10 111 7 110 7 920
2006 10 458 6 672 7 670
% v LY (3,3) 6,6 3,3
Revenue per employee
(Rands) 2007 238 636 559 267 382 239
2006 235 681 547 794 371 079
% v LY 1,3 2,1 3,0
Operating profit per
employee (Rands) 2007 33 217 59 267 44 884
2006 31 925 39 216 35 088
% v LY 4,0 51,1 27,9
Revenue per m2 (Rands) 2007 5 192 6 832 6 161
2006 5 026 6 089 5 658
% v LY 3,3 12,2 8,9
m2 per outlet 2007 1 947 1 041 1 285
2006 2 081 1 096 1 356
% v LY (6,4) (5,0) (5,2)
TRADE RECEIVABLES
Gross receivables 2007 3 362 365
2006 4 273 277
% v LY (25,0) 32,6 31,8
Debtors costs 2007 1 7 8
2006 2 5 7
% v LY (50,0) 40,0 14,3
Debtors cost % 2007 33,3 1,9 2,2
2006 50,0 1,8 2,5
v LY (16,7) 0,1 (0,3)
Average length of book in
months 2007 13,5 13,5
2006 12,5 12,5
v LY 1,0 1,0
Arrears 2007 23 23
2006 15 15
% v LY 53,3 53,3
Arrears % 2007 6,4 6,3
2006 5,5 5,4
v LY 0,9 0,9
Collection rate % 2007 7,4 7,4
2006 8,0 8,0
v LY (0,6) (0,6)
Deposit rate % 2007 20,3 20,3
2006 19,6 19,6
v LY 0,7 0,7
*During 2007, the basis of allocating central Corporate service department
costs to the Traditional Retailing and Wetherleys divisions were changed.
Comparatives have been restated accordingly.
SEGMENTAL ANALYSIS (continued)
R million DIVISIONAL
Early Financial Total
Bird Properties Services Corporate* Group
INCOME STATEMENT
Revenue 2007 37 690 30 4 387
2006 34 611 25 4 001
% v LY 8,8 12,9 20,0 9,6
Credit
revenue 2007 659 3 116
2006 588 2 906
% v LY 12,1 7,2
Cash
revenue 2007 37 31 30 1 271
2006 34 23 25 1 095
% v LY 8,8 34,8 20,0 16,1
Cash
revenue
% 2007 100,0 100,0 29,0
2006 100,0 100,0 27,4
v LY 1,6
Sale of
Merchan-
dise 2007 2 856
2006 2 675
% v LY 6,8
Operating
profit
(loss) 2007 3 6 211 33 853
2006 2 6 160 (15) 727
% v LY 50,0 31,9 17,3
Operating
margin %2007 8,1 30,6 19,4
2006 5,9 26,2 18,2
v LY 2,2 4,4 1,2
Depreci-
ation 2007 2 1 4 47
2006 1 1 (1) 42
% v LY 100,0 11,9
BALANCE SHEET
Assets 2007 17 35 828 1 111 8 105
2006 16 44 932 1 595 7 940
% v LY 6,3 (20,5) (11,2) (30,3) 2,1
Liabili-
ties 2007 (8) (26) (114) (2 100) (2 933)
2006 (7) (26) (148) (2 296) (3 178)
% v LY 14,3 (23,0) (8,5) (7,7)
Net
assets 2007 9 9 714 (989) 5 172
2006 9 18 784 (701) 4 762
% v LY (50,0) (8,9) 41,1 8,6
Cost to
acquire
assets 2007 2 1 12 62
2006 2 1 9 77
% v LY 33,3 (19,5)
RESOURCES
Number of
outlets 2007 44 72 1 293
2006 44 65 1 252
% v LY 10,8 3,3
Number
Of em-
ployees 2007 402 243 781 17 176
2006 432 217 742 16 957
% v LY (6,9) 12,0 5,3 1,3
Retail
m2 2007 7 845 5 913 855 546
2006 7 813 4 665 835 004
% v LY 0,4 26,8 2,5
PRODUCTIVITY
RATIOS
Merchandise
sales:
revenue 2007 65,1
2006 66,9
v LY (1,8)
Revenue
per outlet
(R`000) 2007 841 3 393
2006 773 3 196
% v LY 8,8 6,2
Revenue per
employee
(Rands) 2007 92 040 255 415
2006 78 704 235 950
% v LY 16,9 8,3
Operating
profit per
employee
(Rands) 2007 7 463 49 662
2006 4 630 42 873
% v LY 61,2 15,8
Revenue
per m2
(Rands) 2007 4 716 5 128
2006 4 352 4 792
% v LY 8,4 7,0
m2 per
outlet 2007 178 662
2006 178 667
% v LY (0,7)
TRADE RECEIVABLES
Gross
receiva-
bles 2007 138 7 045
2006 121 6 177
% v LY 14,0 14,1
Debtors
costs 2007 12 (8) 281
2006 8 (8) 210
% v LY 50,0 33,8
Debtors
cost % 2007 8,7 4,0
2006 6,6 3,4
v LY 2,1 0,6
Average
length of
book in
months 2007 7,1 15,6
2006 7,2 14,9
v LY (0,1) 0,7
Arrears 2007 27 1 102
2006 19 794
% v LY 42,1 38,8
Arrears
% 2007 19,6 15,6
2006 15,7 12,9
v LY 3,9 2,7
Collection
rate % 2007 14,0 6,4
2006 13,8 6,7
v LY 0,2 (0,3)
Deposit
rate % 2007 16,6
2006 16,4
v LY 0,2
*During 2007, the basis of allocating central Corporate service department
costs to the Traditional Retailing and Wetherleys divisions were changed.
Comparatives have been restated accordingly.
SEGMENTAL ANALYSIS (continued)
R million GEOGRAPHICAL
Total
RSA Foreign Group
INCOME STATEMENT
Revenue 2007 4 126 261 4 387
2006 3 737 264 4 001
% v LY 10,4 (1,1) 9,6
Credit revenue 2007 2 927 189 3 116
2006 2 697 209 2 906
% v LY 8,5 (9,6) 7,2
Cash revenue 2007 1 199 72 1 271
2006 1 040 55 1 095
% v LY 15,3 30,9 16,1
Cash revenue % 2007 29,1 27,6 29,0
2006 27,8 20,8 27,4
v LY 1,3 6,8 1,6
Sale of merchandise 2007 2 666 190 2 856
2006 2 523 152 2 675
% v LY 5,7 25,0 6,8
Operating profit
(loss) 2007 824 29 853
2006 690 37 727
% v LY 19,4 (21,6) 17,3
Operating margin % 2007 20,0 11,1 19,4
2006 18,5 14,0 18,2
v LY 1,5 (2,9) 1,2
Depreciation 2007 44 3 47
2006 38 4 42
% v LY 15,8 (25,0) 11,9
BALANCE SHEET
Assets 2007 7 545 560 8 105
2006 7 396 544 7 940
% v LY 2,0 2,9 2,1
Liabilities 2007 (2 655) (278) (2 933)
2006 (2 881) (297) (3 178)
% v LY (7,8) (6,4) (7,7)
Net assets 2007 4 890 282 5 172
2006 4 515 247 4 762
% v LY 8,3 14,2 8,6
Cost to acquire assets 2007 61 1 62
2006 71 6 77
% v LY (14,1) (83,3) (19,5)
RESOURCES
Number of outlets 2007 1 178 115 1 293
2006 1 129 123 1 252
% v LY 4,3 (6,5) 3,3
Number of employees 2007 15 647 1 529 17 176
2006 15 294 1 663 16 957
% v LY 2,3 (8,1) 1,3
Retail m2 2007 789 299 66 247 855 546
2006 756 306 78 698 835 004
% v LY 4,4 (15,8) 2,5
PRODUCTIVITY RATIOS
Merchandise sales:
revenue 2007 64,6 72,8 65,1
2006 67,5 57,6 66,9
v LY (2,9) 15,2 (1,8)
Revenue per outlet
(R`000) 2007 3 503 2 270 3 393
2006 3 310 2 146 3 196
% v LY 5,8 5,8 6,2
Revenue per employee
(Rands) 2007 263 693 170 700 255 415
2006 244 344 158 749 235 950
% v LY 7,9 7,5 8,3
Operating profit per
employee (Rands) 2007 52 662 18 967 49 662
2006 45 116 22 249 42 873
% v LY 16,7 (14,8) 15,8
Revenue per m2 (Rands) 2007 5 227 3 940 5 128
2006 4 941 3 355 4 792
% v LY 5,8 17,4 7,0
m2 per outlet 2007 670 576 662
2006 670 640 667
% v LY (10,0) (0,7)
TRADE RECEIVABLES
Gross receivables 2007 6 455 590 7 045
2006 5 639 538 6 177
% v LY 14,5 9,7 14,1
Debtors costs 2007 261 20 281
2006 199 11 210
% v LY 31,2 81,8 33,8
Debtors cost % 2007 4,0 3,4 4,0
2006 3,5 2,0 3,4
v LY 0,5 1,4 0,6
Average length of
book in months 2007 15,6 15,9 15,6
2006 14,9 15,9 14,9
v LY 0,7 0,7
Arrears 2007 972 130 1 102
2006 685 109 794
% v LY 41,9 19,3 38,8
Arrears % 2007 15,1 22,0 15,6
2006 12,1 20,3 12,9
v LY 3,0 1,7 2,7
Collection rate % 2007 6,4 6,3 6,4
2006 6,7 6,3 6,7
v LY (0,3) (0,3)
Deposit rate % 2007 14,9 24,7 16,6
2006 13,9 22,1 16,4
v LY 1,0 2,6 0,2
*During 2007, the basis of allocating central Corporate service department
costs to the Traditional Retailing and Wetherleys divisions were changed.
Comparatives have been restated accordingly.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6 months to 12 months to
February February August
2007 2006 2006
R million R million R million
1 BASIS OF PREPARATION
These summarised consolidated
interim financial statements
have been prepared using
accounting policies compliant
with International Financial
Reporting Standards ("IFRS")
and in accordance with IAS 34
(Interim Financial Reporting).
The accounting policies used
are consistent with those used
for the 2006 annual financial
statements, which were prepared
in accordance with IFRS.
2 REVENUE
Sale of merchandise 2 856 2 675 4 963
Other operating revenue 1 471 1 278 2 523
Finance charges 591 501 1 043
Financial services 657 588 1 103
Net insurance income 614 550 1 020
Gross insurance income 1 109 983 1 777
Reinsurance premium (495) (433) (757)
Short-term loan income 43 38 83
Rendering of services 223 189 377
Dividends and interest
received 60 48 93
Total revenue 4 387 4 001 7 579
3 EARNINGS PER SHARE
Reconciliation between profit
attributable to ordinary
shareholders to headline
earnings
Profit attributable to
ordinary shareholders 589 515 894
Net profit on disposal of
vehicles and equipment (1) - -
Adjustment to fair value of
investment properties - - (1)
Impairment of trademarks 1 - -
Headline earnings 589 515 893
Number of ordinary shares
Outstanding 117 709 447 120 157 907 121 018 826
Shares in issue 123 997 044 122 887 075 123 997 044
Shares held as treasury
shares (6 287 597) (2 729 168) (2 978 218)
Weighted average 119 249 033 119 907 734 120 305 470
Shares in issue 123 997 044 122 887 075 123 236 770
Shares held as treasury
shares (4 748 011) (2 979 341) (2 931 300)
Fully diluted weighted
average 120 309 323 121 748 465 122 087 297
4 TRADE AND OTHER RECEIVABLES
Net instalment sale debtors 3 010 3 168 2 894
Gross instalment sale debtors 4 217 4 373 4 012
Payable within one year 3 110 3 235 2 999
Payable thereafter 1 107 1 138 1 013
Provisions (1 207) (1 205) (1 118)
Allowance for doubtful debts (442) (383) (370)
Provision for unearned finance
charges and club fees (516) (511) (463)
Net provision for unearned
premiums (249) (311) (285)
Gross provision for unearned
premiums (710) (607) (679)
Reinsurance portion for
unearned premiums 461 296 394
Net term loan debtors 1 945 1 221 1 404
Gross term loan debtors 2 730 1 723 1 942
Payable within one year 1 892 1 088 1 311
Payable thereafter 838 635 631
Provisions (785) (502) (538)
Allowance for doubtful debts (205) (115) (132)
Provision for unearned finance
charges and club fees (440) (284) (305)
Net provision for unearned
premiums (140) (103) (101)
Gross provision for unearned
premiums (502) (306) (349)
Reinsurance portion for
unearned premiums 362 203 248
Net short-term loans 48 38 39
Payable within one year 98 81 88
Provisions (50) (43) (49)
Allowance for doubtful debts (18) (12) (16)
Provision for unearned
finance charges (32) (25) (28)
Net provision for unearned
premiums - (6) (5)
Other 136 125 120
Total trade and other
receivables 5 139 4 552 4 457
Trade receivables comprising:
Net trade debtors 5 003 4 427 4 337
Gross trade debtors 7 045 6 177 6 042
Payable within one year 5 100 4 404 4 398
Payable thereafter 1 945 1 773 1 644
Provisions (2 042) (1 750) (1 705)
Allowance for doubtful debts (665) (510) (518)
Provision for unearned finance
charges and club fees (988) (820) (796)
Net provision for unearned
premiums (389) (420) (391)
5 RECONCILIATION OF PROFIT
BEFORE TAXATION TO CASH
GENERATED FROM OPERATING
ACTIVITIES
Profit before taxation 835 725 1 267
Depreciation and amortisation 47 47 92
Other adjustments 8 (17) (14)
Increase in provisions 333 323 283
Debtors allowances and
provisions 337 334 289
Creditor provisions (4) (11) (6)
Insurance investment income (37) (30) (62)
Net finance costs 54 37 79
Total cash generated from
operating activities 1 240 1 085 1 645
6 COMMITMENTS
Estimated future rental of
premises and trading stores,
vehicles and other 1 295 1 033 1 188
Payable within one year 411 357 392
Payable within two to
five years 830 652 766
Payable thereafter 54 24 30
Total capital expenditure 93 84 138
Contracted for 17 16 14
Not yet contracted for 76 68 124
Total commitments 1 388 1 117 1 326
Date: 21/05/2007 12:00:01 Produced by the JSE SENS Department.
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