| Wed 21 Feb 2001, 0:00 | | Homechoice Holdings Ltd - Financial Results |
|
REGISTRATION NUMBER 1991/005430/06
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2000
GROUP INCOME STATEMENT
YEAR YEAR YEAR
ENDED ENDED ENDED
31/12/2000 31/12/1999 31/12/1999
R'000 R'000 R'000
PRO FORMA
AUDITED UNAUDITED % CHANGE AUDITED
REVENUE 655 797 516 343 27 516 343
OPERATING PROFIT BEFORE
EXCEPTIONAL ITEMS 85 701 70 169 22 90 467
INTEREST PAID (8 826) (5 806) (5 806)
INTEREST RECEIVED 831 2 055 2 055
77 706 66 418 17 86 716
EXCEPTIONAL ITEMS
EMPLOYEE SHARE TRUST LOAN
WRITTEN DOWN 1 163 - -
MALAWI CLOSURE COST 1 432 - -
REVISED PROVISION
FOR DOUBTFUL DEBTS
AND CUSTOMER
ACQUISITION COSTS 73 500 - -
PROFIT AFTER INTEREST AND
EXCEPTIONAL ITEMS 1 611 66 418 86 716
TAXATION
- CURRENT YEAR (1 253) 16 076 22 165
- PRIOR YEAR RATE
ADJUSTMENT - (2 485) (5 145)
ATTRIBUTABLE PROFIT 2 864 52 827 69 696
WEIGHTED AVERAGE
NUMBER OF SHARES
IN ISSUE ('000) 135 576 130 139 130 139
ADJUSTED HEADLINE
EARNINGS PER SHARE (CENTS) 41,8 38,7 8 49,6
EARNINGS PER SHARE (CENTS) 2,1 40,6 53,6
DILUTED EARNINGS
PER SHARE (CENTS) 2,1 40,1 52,9
ADJUSTED HEADLINE EARNINGS
IS DETERMINED AS FOLLOWS: R'000 R'000 R'000
ATTRIBUTABLE PROFIT 2 864 52 827 69 696
ADJUSTED FOR:
EMPLOYEE SHARE TRUST LOAN
WRITTEN DOWN 1 163 - -
MALAWI CLOSURE COSTS 1 127 - -
REVISED PROVISION FOR
DOUBTFUL DEBTS AND
CUSTOMER ACQUISITION
COSTS 51 450 - -
PRIOR YEAR TAX RATE
ADJUSTMENT - (2 485) (5 145)
ADJUSTED HEADLINE EARNINGS 56 604 50 342 12 64 551
GROUP BALANCE SHEET
31/12/2000 31/12/1999
R'000 R'000
ASSETS
FIXED AND OTHER NON-CURRENT ASSETS
TANGIBLE ASSETS 13 533 14 120
INTANGIBLE ASSETS 1 601 1 892
EMPLOYEE SHARE TRUST LOAN 4 392 5 589
19 526 21 601
CURRENT ASSETS
INVENTORY 76 341 66 802
TRADE RECEIVABLES 467 921 392 677
OTHER RECEIVABLES 10 459 6 404
BANK 9 3 546
554 730 469 429
TOTAL ASSETS 574 256 491 030
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 362 490 356 108
NON-CURRENT LIABILITIES
INTEREST BEARING LONG-TERM LIABILITIES 22 9 053
NON-INTEREST BEARING LONG-TERM LIABILITIES - 6 546
DEFERRED TAXATION 50 862 52 699
50 884 68 298
CURRENT LIABILITIES
INTEREST BEARING CURRENT LIABILITIES 93 474 2 226
NON-INTEREST BEARING CURRENT LIABILITIES 67 408 64 398
160 882 66 624
TOTAL LIABILITIES 211 766 134 922
TOTAL EQUITY AND LIABILITIES 574 256 491 030
ABRIDGED CASH FLOW STATEMENT
YEAR ENDED YEAR ENDED
31/12/2000 31/12/1999
R'000 R'000
CASH INFLOW FROM OPERATIONS 91 750 97 423
WORKING CAPITAL REQUIREMENTS (160 863) (139 404)
NET INTEREST PAID (6 278) (3 751)
TAXATION PAID (767) (3 798)
NET CASH OUTFLOW FROM
OPERATING ACTIVITIES (76 158) (49 530)
NET CASH OUTFLOW FROM
INVESTING ACTIVITIES (3 013) (8 007)
NET CASH (OUTFLOW) INFLOW FROM
FINANCING ACTIVITIES (17 800) 102 145
NET (DECREASE)/INCREASE IN CASH AND
CASH EQUIVALENTS (96 971) 44 608
CASH AND CASH EQUIVALENTS/(BANK OVERDRAFT)
AT BEGINNING OF YEAR 3 546 (41 062)
(BANK OVERDRAFT)/CASH AND CASH
EQUIVALENTS AT END OF YEAR (93 425) 3 546
NO STATEMENT OF CHANGES IN EQUITY IS INCLUDED DUE TO THE FACT THAT THE ONLY
ADJUSTMENT TO EQUITY OUTSIDE OF RETAINED EARNINGS IS GOODWILL REVERSED OF R3,6
MILLION.
OTHER FINANCIAL INFORMATION
YEAR YEAR
ENDED ENDED
31/12/2000 31/12/1999
DEBT/EQUITY RATIO (:1) 0,26 0,03
DEPRECIATION - FIXED ASSETS (R'000) 7 619 6 958
CAPITAL EXPENDITURE (R'000) 7 472 9 785
CAPITAL COMMITMENTS (R'000)
- AUTHORISED 75 -
- AUTHORISED AND CONTRACTED FOR 7 004 3 665
SHARES IN ISSUE AT END OF YEAR ('000) 135 576 133 626
NET ASSET VALUE PER SHARE (CENTS) 267,4 266,5
COMMENTARY
TRADING RESULTS
THE SOUTH AFRICAN RETAIL ENVIRONMENT HAS ENCOUNTERED SIGNIFICANT CHALLENGES
DURING 2000 WHICH HAVE BEEN WELL DOCUMENTED IN THE FINANCIAL PRESS AND
HOMECHOICE HAS NOT BEEN IMMUNE TO THESE CHALLENGES. HOWEVER, WE ARE PLEASED TO
REPORT A CONTINUED GROWTH IN REVENUE (27%), WHICH UNDERLINES THE APPEAL OF HOME
SHOPPING IN THE MASS MARKET.
ADJUSTED HEADLINE EARNINGS PER SHARE AT 41,8C IS 15,7% LESS THAN LAST YEAR.
THIS IN LARGE MEASURE REFLECTS THE CONSERVATIVE VIEW ADOPTED BY THE DIRECTORS
ON THE DOUBTFUL DEBT PROVISION AND CUSTOMER ACQUISITION COSTS, AS WELL AS THE
REDUCTION OF TAX EXEMPT FOREIGN INCOME FOLLOWING THE CLOSURE OF THE MALAWI
OPERATIONS. IT IS INTERESTING TO NOTE THAT ADJUSTED HEADLINE EARNINGS PER SHARE
IS 8% UP ON A 1999 PRO FORMA BASIS (REFER TO NOTE BELOW).
OPERATING MARGIN AT 13,1% (1999: 13,6%) REMAINS COMPARABLE ON A PRO FORMA BASIS
REVISED PROVISION FOR DOUBTFUL DEBTS AND CUSTOMER ACQUISITION COSTS
OVER THE YEARS THE GROUP HAS INVESTED CONSIDERABLE RESOURCES IN RISK ANALYSIS
ASSOCIATED WITH NEW CUSTOMERS. IT IS NOW POSSIBLE TO ACCURATELY DETERMINE,
WITHIN AN ACCEPTABLE STATISTICAL TOLERANCE, THE LIKELY DELINQUENCY WITHIN
DEFINED RISK BANDS OF NEWLY ACQUIRED CUSTOMERS AT THE TIME OF SALE.
THE DIRECTORS HAVE THEREFORE DEEMED IT PRUDENT TO CHANGE THE BASIS OF
ESTIMATION OF DELINQUENCY BY RAISING THE RELEVANT PROVISION IN THE MONTH OF
SALE AGAINST NEWLY ACQUIRED AND EXISTING CUSTOMERS RATHER THAN THE PREVIOUS
METHOD OF PROVIDING IN FULL AGAINST A DEBTOR AFTER A 120 DAY PERIOD OF
INACTIVITY. THIS INCLUDES THE WRITE OFF OF NEW CUSTOMER ACQUISITION COSTS IN
THE MONTH OF SALE. THIS HAS RESULTED IN AN ADJUSTMENT OF R73,5 MILLION RELATING
TO PRIOR YEARS BEING ACCOUNTED FOR AS AN EXCEPTIONAL ITEM IN THE CURRENT YEAR.
THE REVISED METHOD HAS BEEN USED IN THE CALCULATION OF THE 2000 OPERATING
PROFIT.
TO BE ABLE TO EFFECTIVELY COMPARE THIS YEAR'S RESULTS TO 1999 WE HAVE PROVIDED
A PRO FORMA INCOME STATEMENT RESTATING THE 1999 RESULTS ON THIS NEW ESTIMATION
BASIS.
WORKING CAPITAL MANAGEMENT
CASH FLOW
AS PREVIOUSLY ADVISED, MANAGEMENT HAVE SPECIFICALLY FOCUSSED ON CASH FLOW AND
DEBT GEARING RISK. IT IS VERY PLEASING TO REPORT THAT THIS HAS SLOWED THE RATE
OF GEARING GROWTH WITH INTEREST BEARING DEBT INCREASING BY ONLY R 24,4 MILLION
IN THE SECOND SIX MONTHS OF THE YEAR COMPARED TO R61,3 MILLION IN THE FIRST
HALF. THE FOCUS ON CASH FLOWS WILL CONTINUE AND MANAGEMENT EXPECT IMPROVEMENTS
IN THIS AREA IN 2001.
TRADE RECEIVABLES
TRADE RECEIVABLES CONTINUE TO REFLECT THE GROWTH IN CREDIT REVENUE OF 30%. THE
AGEING OF THE BOOK AND CASH YIELDS ARE IN LINE WITH PRIOR YEARS. AS DISCUSSED
ABOVE, THE DEBTOR EXPOSURE IS WELL PROVIDED.
THE CURRENT DEBTORS BOOK COMPRISES APPROXIMATELY 472 000 ACCOUNTS REPRESENTING
A GROWTH OF 35% OVER 1999.
INVENTORY
INVENTORY LEVELS HAVE BEEN AFFECTED BY SLIGHTLY LOWER REVENUE GROWTH IN THE
SECOND SIX MONTHS. THEY DO HOWEVER, REMAIN AT GOOD STOCK TURN RATIOS OF 2,5
(1999: 2,1) WITH THE AGEING IMPROVING OVER 1999.
CONTINGENT LIABILITY
BASED ON SUBSTANTIAL EVIDENCE AND SENIOR LEGAL COUNSEL ADVICE THE DIRECTORS
CONTINUE TO BE OF THE OPINION THAT THE SOUTH AFRICAN REVENUE SERVICE 1999 CLAIM
FOR CUSTOMS DUTY AND VAT OF R10 MILLION AND FORFEITURES OF R21 MILLION IS
INVALID. THE DIRECTORS HAVE THEREFORE APPLIED TO THE HIGH COURT OF SOUTH AFRICA
TO SET ASIDE THE CLAIM. IT IS ANTICIPATED THE CASE WILL BE HELD IN THE LATTER
PART OF 2001.
PROSPECTS
HOMECHOICE IS THE LEADING CATALOGUE RETAILER IN SOUTH AFRICA. HOMESHOPPING AS A
RETAIL CHANNEL CONTINUES TO DISPLAY SIGNIFICANT GROWTH TRENDS AND HOMECHOICE IS
WELL PLACED TO CAPITALISE ON THIS OPPORTUNITY.
THE DIRECTORS EXPECT REVENUE AND EARNINGS TO CONTINUE TO GROW IN REAL TERMS IN
FUTURE YEARS.
ON BEHALF OF THE BOARD:
R E GARRATT J C HUBBARD
EXECUTIVE CHAIRMAN FINANCIAL DIRECTOR
CAPE TOWN
21 FEBRUARY 2001
REGISTERED ADDRESS
200 MAIN ROAD, CLAREMONT 7708 PRIVATE BAG X150, CLAREMONT 7735 TEL: (021) 680
1000 FAX: (021) 680 1001
MERCANTILE REGISTRARS LIMITED 11 DIAGONAL STREET, JOHANNESBURG 2001
DIRECTORS
RE GARRATT, MY GUTTLER, JC HUBBARD, WG MORRISSEY, D PATERSON, DA WALKER, KDM
WARBURTON*, AGW WILLIAMSON*
* (NON EXECUTIVE)
