| Mon 6 Feb 2012, 7:05 | | ABL/ABLP - African Bank Investments Limited - Trading update for the first |
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ABL ABLP
ABL
ABL/ABLP - African Bank Investments Limited - Trading update for the first
quarter ended 31 December 2011
AFRICAN BANK INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registered Bank controlling company)
(Registration number 1946/021193/06)
(Ordinary share code: ABL) (ISIN: ZAE000030060)
(Preference share code: ABLP) (ISIN: ZAE000065215)
("ABIL" or "the group")
TRADING UPDATE FOR THE FIRST QUARTER ENDED 31 DECEMBER 2011
ABIL issues quarterly updates in order to provide investors with timely
insights into strategic and operational performance trends. These updates
cover certain key metrics but are not in themselves indicators of the group`s
profitability.
The group recorded a solid operational performance in the quarter ended 31
December 2011("the period" or "the quarter"), driven by continuing strong
sales from new product offerings introduced in 2011. In addition, the rapid
increase in the African Bank footprint through kiosks and carve-outs within
EHL stores as well as improvements in several key dials in EHL boosted
performance. This was supported by stable external trading conditions and
consumer spending patterns.
Banking business unit
Total credit disbursements for the quarter increased by 34% relative to the
first quarter of the 2011 financial year ("the comparable period"), to R7,5
billion (Q1 2011: R5,6 billion). Disbursements from non-furniture credit
products and the kiosks and carve-outs within the EHL distribution network,
grew from R276 million in the comparable period to R1 029 million in the
first quarter of the 2012 financial year.
A higher volume of new loans granted and an increased average loan size of
R11 307 provided equal contributions to the growth in African Bank originated
disbursements. Average loan term increased from 44 months in the comparable
period to 47 months in the period.
The group added 196 000 new credit customers in the quarter, an 11% increase
on the number of new customers for the comparable period.
Gross advances increased by 12% over the period to R44,6 billion. African
Bank traditional advances increased by 11% to R36,8 billion, while EHL
furniture credit advances grew by 14% to R7,9 billion. It should be noted
that the December quarter is traditionally the strongest quarter in terms of
sales, and therefore may not be representative of the performance expected
for the full year.
Yields declined marginally during the period while operating cost growth
remained elevated given the continuing rapid increase in distribution and
general capacity building within the group.
Asset quality was steady. Non-performing loans ("NPLs") as a percentage of
advances continued to decline modestly on the back of the faster growth in
performing loans. NPL coverage increased slightly. ABIL continues to note
declining payment profiles and increasing debt burdens in specific customer
segments and has been pro-active in adjusting for this in its underwriting
models. The group has implemented a range of measures over the past few
months to moderate its risk exposure, including price adjustments, stricter
affordability criteria, shorter loan terms, smaller loan sizes and reduced
exposure to the highest risk groups.
Retail business unit
Merchandise sales increased by 7% to R1,6 billion for the quarter. The
merchandise sales credit mix declined from 66,4% in 2011 to 65,9% in 2012.
Ellerines (up 10%), Beares (up 7%) and Furniture City (up 7%) performed well,
also growing 15%, 1% and 20% respectively on a comparable basis for the
quarter. Geen & Richards grew by 2% (1% comparable) and Dial-a-Bed by 1% (6%
comparable). Wetherlys was down 2%, but up 5% on a comparable basis.
Gross margins firmed relative to last year as a result of better buying. Cost
growth was somewhat higher than planned, much of which was volume variance
related, but remains below inflation and below the growth in sales, thereby
improving operating leverage.
Inventory management improved, resulting in better stock turns and a cleaner
stock profile at the end of December 2011.
The new distribution centre operated successfully through its first peak
trading period. It served 170 stores during the period and will begin to
serve a further 114 stores during January and February 2012. The footprint
optimisation project continued with a further reduction in store space,
resulting in sales per square meter improving. Sale per employee also showed
significant improvement in the quarter.
Preference share issue
Shareholders are advised that ABIL is considering issuing the next tranche of
variable-rate, perpetual, non-cumulative, non-participating preference shares
to investors for cash by way of a private placement in the second quarter of
its financial year. The shares will rank on a pari passu basis with ABIL`s
existing listed preference shares.
Outlook
Real wage increases have begun to moderate but remain positive. Within ABIL
the strong levels of activity in the previous financial year continued into
the first quarter of the 2012 financial year, and given the current impetus
in the business, the group remains on track to achieve its previously
communicated financial objectives for 2012.
The information provided in this update is not an earnings forecast and has
not been reviewed and reported on by ABIL`s external auditors.
On behalf of the board
Midrand
6 February 2012
This announcement, together with a short presentation, is available on the
African Bank Investments Limited website at http://www.abil.co.za
ABIL will hold a conference call on Monday, 6 February 2012 for interested
parties. The conference call will take the form of a short overview of the
quarter, followed by questions. A slide presentation covering the overview
will be available for download prior to the call on www.abil.co.za
Time 16:00 (SA time)
LIVE CALL PLAYBACK (available for 48
hours)
Code 2134#
South Africa & Other South Africa & Other
Toll 011 535 3600 011 305 2030
USA USA
Toll-free 1 800 860 2442 1 412 317 0088
UK UK
Toll-free 0 800 917 7042 0 808 234 6771
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 06/02/2012 07:05:03 Produced by the JSE SENS Department.
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