| Mon 29 Oct 2001, 0:00 | | Jd Group Limited - Audited Financial Results For T |
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Audited financial results for the year ended 31 August 2001
Revenue up 10% to R3,8 billion
Income before exceptional loss up 19% to R564 million
Operating margin before finance costs up from 15,9% to 17,3%
Headline earnings per share up 20% to 351,2 cents
Gearing maintained at 42%
Exceptional loss on discontinuance R167 million
Steady growth in spite of challenging market conditions
International expansion into Poland ahead of target
Nedcor alliance well underway
Acquisition of BoConcept master licence in UK
29 October 2001
Enquiries:
JD Group Limited Tel: + 27 (0) 11 408 0213
Jan Bezuidenhout, Director Corporate Services
College Hill Investor Relations Tel: + 27 (0) 11 447 3030
Julia Kerr
John Paul Waites
JD GROUP LIMITED
(Reg. No. 1981/009108/06)
("the Group")
AUDITED FINANCIAL RESULTS FOR YEAR ENDED 31 AUGUST 2001
Financial overview
The period under review is for the 12 months to 31 August 2001. Comparative
figures have been restated to reflect a similar 12-month proforma trading
period, in light of the prior 14-month accounting period.
The Group is pleased to announce a strong set of results in spite of the
continuing weakness in trading conditions. During the year under review,
the Group increased revenue by 10% to R3,8bn (2000: R3,4bn) and an operating
income of R564m (2000: R473m) was achieved before a R167m exceptional
discontinuance loss.
In accordance with accounting guideline AC306, headline earnings per share
was adjusted for the once-off discontinuance loss of R167m, which is
discussed further in the operational review. Headline earnings per share
improved 20% to 351,2c.
Operating income before finance costs increased 21% to R657m with operating
margins improving to 17,3% (2000: 15,9%) due to an increase in finance
charges earned and the strict management focus on costs. The Group is
confident that these margins can be further improved.
Sales of merchandise continued to show good growth in real terms. Income
from interest increased through maximum credit terms being extended from 21
to 24 months. Finance charges grew by 14% with growth in the receivables
book of 12,9%. The product margins remained under pressure, reflecting the
tough trading conditions.
Cash generated by operating activities was R212m, compared with R48m for the
corresponding period. Net cash utilisation reduced from R249m to R71m. The
net gearing ratio was 41,8% (2000: 41,2%), well within the Group's targeted
gearing range of 35% to 50%. As a result, the Group remains well positioned
to benefit from future market opportunities.
During the period, asset management remained strong. Southern African
inventories decreased almost 5% from R354m to R337m. Inventories of R359m
now include Abra SA's ("Abra") inventories of R22m.
Equally gratifying is the decline in southern African arrears from 16,9% to
13,1% and the decrease in bad debts from continuing operations from 4,6% to
3,9%. Insurance cover for the Group's South African receivables is
adequate.
Operational review
In November 1997, the Board believed it imperative for the Group to conduct
its own research into the changing demographics of South Africa. This was
to establish the potential impact these changes would have on the disposable
income of its target market. The findings of this research, released in May
1998, was greeted with scepticism. Since then, the Group has been tracking
its experience against the research findings. Today, there is acceptance
that the 1998 research findings are indeed a more than accurate assessment
of tomorrow and the years that lie ahead.
In its interim results announcement it was recorded that the Group would
further rationalise its stores in an attempt to pre-empt future demographic
changes. In line with this, exposure to the lower end of the market was
discontinued through the cessation of trade with this segment, coupled with
the discontinuance of Score as a brand.
A strategic rationalisation and restructuring programme was undertaken
during the period, which effectively repositioned the Price 'n Pride brand.
The Price 'n Pride trading formula will now attract customers in a different
segment of the market.
The discontinuance resulted in a once-off loss of R167m comprising trade
receivables of R117m, retrenchment provisions of R3m, inventory impairment
of R9m, lease commitments of R12m and a net loss of R26m for the period May
2001 to year end. This loss, net of taxation, has been adjusted in
calculating headline earnings.
The R117m of trade receivables comprises only the identified segmented
customers whose profiles no longer form part of the new trading formula.
The Board is confident that the strategies employed, both internally and
externally, will position the business well for increased returns and
ongoing growth.
Our Nedcor alliance
The rollout of the Nedcor alliance and the conversion of financial services
kiosks into Peoples Bank "in-store points of presence" proceeded
particularly well. At year end, R28m in loans had been generated through
106 Peoples Bank in-store points of presence, which were established in
Russells, Bradlows and Joshua Doore outlets. The Group continues to roll
out 20 points of presence per month and is currently investigating
additional distribution channels focused on enhancing the in store business
model to better accommodate specific consumer needs and market sizes.
The alliance, which provides the Group with an additional diversified
earnings stream, will contribute positively towards overall performance in
the 2002 financial year.
Poland
The period under review includes nine months of trading for the Group's
Polish operation, Abra, which performed in line with management
expectations. Strong focus on merchandising, marketing and overall
efficiencies led to improved sales achievements. It is also pleasing to
report that Abra's access to quality retail space improved significantly
during the year and the number of stores increased to 19 by year end.
Shortly after year end, three additional stores were opened, including a
flagship outlet in Warsaw. The Group continues to evaluate future
opportunities on an ongoing basis and plans to grow the existing store base
significantly.
Notwithstanding the challenging Polish economy, management is confident that
the uniqueness of the trading formula in Poland will be successful.
BoConcept UK Limited - post year end acquisition
With the Group's strategy to diversify into new geographical markets,
management is particularly pleased to announce that after investigating a
number of opportunities it has finalised master licence negotiations with
Club8 Retail A/S ("Club8"), a subsidiary of Denka Holding A/S, a Copenhagen
Stock Exchange listed furniture manufacturer and retail group. These
negotiations led to the acquisition of the master licence for the BoConcept
retail stores throughout the UK, including two outlets, one in London and
the other in Bournemouth. The Group will pay a maximum consideration of
GBP6,3m subject to certain performance targets.
The acquisition allows for JD Group to own the exclusive rights to the
further development and operation of BoConcept stores throughout the UK's
lucrative and growing retail furniture market. The BoConcept system
consists of the merchandise supplied by Club8 as well as the intellectual
property including trade names, goodwill, information, know-how, copyright
and trademarks.
Other than the two stores acquired by the Group in the UK, BoConcept is
currently represented worldwide through 84 stores situated in China,
Cypress, Germany, Greece, Japan, Poland, Portugal, Spain, Sweden, UK and
USA.
The incorporation of the two existing owned stores began subsequent to year
end. The Group envisages that the roll out of new stores in the UK is
expected to reach between 30 - 50 corporate owned stores over a five-year
period, which the Group considers to be commercially prudent.
The former licencee owners of the BoConcept store in Bournemouth, Poul and
Suzie Kristensen, hold a 15% stake BoConcept UK while the Group holds the
balance of the equity. Poul Kristensen has been appointed Managing
Director. Linda Manson, the previous CEO of Bradlows, has joined the
BoConcept management team.
BoConcept UK is the only entity worldwide that enjoys ownership of a master
licence for an entire market. This acquisition presents a unique
opportunity for the Group to significantly develop globally.
Dual listing on Namibian Stock Exchange
On 28 August 2001, the Group was granted a dual listing on the Namibian
Stock Exchange ("NSX") resulting in the listing of JD Group ordinary shares
on the NSX. The dual listing serves to demonstrate the Group's commitment
to the development of Namibia and to ensure accessibility of its shares to
the Namibian people.
Group prospects
It has been said that the true visionary is one who observes the future and
acts before it occurs.
While there is continued uncertainty regarding global markets, the
management of JD Group remains confident that it has the means at its
disposal to maximise the potential of any given situation as it arises. The
Group will continue to grow both its retailing and financial services in
southern Africa, increase its pace of growth in Poland and seek new
opportunities wherever they present themselves. The stated growth strategy
is to look at all new opportunities but only where the Group believes it can
bring something different to the market.
The Group's actions over the past number of years position it well for the
future. We have done what we believe must be done in order to ensure a
prosperous tomorrow. What is clear is that what held true in the past will
become less and less relevant in the future. Equally true is that where we
have developed new strategies to deal with prevailing realities we have, in
fact, over achieved.
Share Transactions Totally Electronic (STRATE)
The Group implemented STRATE with effect from 28 May 2001.
Annual Report
The annual financial statements for the year ended 31 August 2001 will be
posted to shareholders on or about 20 November 2001. The financial
statements will include a notice of the annual general meeting of
shareholders to be convened on Wednesday 30 January 2002.
Dividend
The directors have resolved to declare dividend No. 36 of 37 cents (2000: 31
cents) per ordinary share, being the final dividend for the year ended 31
August 2001. The last day to trade "CUM" dividend will be Friday 9 November
2001. The shares of JD Group will commence trading "EX" the dividend from
the commencement of business on Monday, 12 November 2001, and the record
date will be Friday, 16 November 2001. Dividend cheques / transfers will be
posted / initiated on or about Monday, 19 November 2001.
For and on behalf of the board Registered office
David Sussman Executive Chairman 11th Floor
Gerald Volkel Financial Director JD House
27 Stiemens Street
Braamfontein
Johannesburg
2001
(PO Box 4208,
(Johannesburg 2000)
26 October 2001 website: www.jdg.co.za
Executive directors: I D Sussman (Executive Chairman), H C Strauss
(Managing), J L Bezuidenhout, N W E Thomson (British), G V lkel
Non-executive directors: M E King, D Konar, I S Levy, M Lock, M J Shaw
Company secretary: M I Jaye CA(SA)
Transfer secretaries: Mercantile Registrars Limited
8th Floor, 11 Diagonal Street, Johannesburg 2001
(PO Box 1053, Johannesburg 2000)
JD Group Segmental Analysis per Business Unit
(units) Russells Joshua Bradlows Price 'n
Doore Pride
Year to 31 August 2001
Revenue Rm 1,287 916 578 350
Operating income Rm 343 163 101 67
Depreciation Rm 2 2 1 1
Total assets Rm 1,209 847 545 676
Total current liabilities Rm 180 145 87 79
Capital expenditure Rm 1 1 1 1
Operating margin % 26,7 17,8 17,5 19,0
Cash price sales Rm 770 563 366 176
Percentage of Group's sale % 33.5 24.5 15.9 7.6
of merchandise
Number of stores 191 142 92 131
Revenue per store R'000 6,738 6,451 6,283 2,672
Retail square meterage 131,185 112,327 66,472 75,107
Revenue per square metre 9,811 8,155 8,695 4,660
Rand
Number of employees 2,667 2,221 1,483 2,339
Revenue per employee R'000 483 412 390 150
Bad debts written off as a % 3,5 4,3 3,4 5,0
percentage of gross
receivables
Debtors arrears % 11,6 10,8 10,5 21,1
Average length of book Months 15,0 14,8 13,9 20,4
(units) Score Electric Abra Corpo- Group
Express rate
Year to 31 August 2001
Revenue Rm 270 289 98 3,788
Opera-ting income Rm 40 43 (11) (89) 657
Depre-ciation Rm 1 1 1 42 51
Total assets Rm 228 54 980 4,539
Total current liabilities Rm 51 22 479 1,043
Capital expenditure Rm 2 60 66
Operating margin % 14,9 14,8 (11,4) 17,3
Cash price sales Rm 144 185 97 2,301
Percentage of Group's sale % 6.3 8.0 4.2
of merchandise
Number of stores 109 19 684
Revenue per store R'000 2,651 5,158 5,538
Retail square meterage 16,930 18,586
Revenue per square metre 17,070 5,273
Rand
Number of employees 676 253 345 9,984
Revenue per employee R'000 428 387 379
Bad debts written off as a % 1,7 3,9
percentage of gross
receivables
Debtors arrears % 5,8 13,1
Average length of book Months 12,9 16,2
(units) Russells Joshua Brad- Score/ Electric Corpo Group
Doore lows Price Express rate
'n
Pride
Proforma 12 months
to 31 August 2000
Revenue Rm 1,125 835 534 679 256 - 3,429
Operating Rm 243 142 82 106 35 (64) 544
income
Depreciation Rm 2 2 2 2 - 38 46
Total assets Rm 954 723 483 836 185 329 3,510
Total current Rm 159 118 71 68 43 224 683
liabilities
Capital Rm 3 1 1 1 1 48 55
expenditure
Operating % 21,6 17,0 15,4 15,6 13,7 15,9
margin
Cash price Rm 695 520 338 364 166 2,083
sales
Percentage of % 33,3 25,0 16,2 17,5 8,0
Group's sale
of merchandise
Number of 184 140 91 158 98 671
stores
Revenue R'000 6,117 5,967 5,870 4,297 2,609 5,111
per store
Retail square 130,179 111,239 69,682 92,857 16,689
meterage
Revenue Rand 8,647 7,510 7,665 7,312 15,319
per square
metre
Number of 2,606 2,086 1,453 2,623 628 308 9,704
employees
Revenue per R' 432 400 368 259 407 353
employee 00
0
Bad debts % 3,5 4,0 3,7 4,7 2,6 4,6
written off as
a percentage
of gross
receivables
Debtors % 13,4 14,2 12,5 29,6 6,2 16,9
arrears
Average length Mo 12,2 12,7 12,9 19,3 11,5 13,8
of book nt
hs
JD Group Income Statement
Audited Unaudited Audited
Proforma
12 months 12 months 14 months %
ended ended ended Chan
ge
31 August 31 August 31 August (not
2001 2000 2000 e 1)
R million R million R million
Sale of merchandise 2,301 2,083 2,393 10
Finance charges earned 738 646 751 14
Financial services- 560 540 603 4
Other services 189 160 181 18
Revenue 3,788 3,429 3,928 10
Continuing 3,517 3,023 3,465
Discontinued 271 406 463
Cost of sales 1,530 1,342 1,541 14
Continuing 1,447 1,222 1,404
Discontinued 83 120 137
Operating income before the 706 588 615 20
following items :
Depreciation 51 46 53 11
Surplus on disposal of (2) (2) (3)
property, plant and equipment
Operating income before finance 657 544 565 21
costs
Continuing 617 476 494
Discontinued 40 68 1
Investment income (8) (7) (7)
Finance costs 101 78 88 29
Income before loss on 564 473 484 19
discontinuance
Exceptional item : Loss on 167 - -
discontinuance
Income before taxation 397 473 484 (16)
Taxation 123 146 149 (16)
Income after taxation 274 327 335 (16)
Attributable to outside (1) -
shareholders -
Income attributable to 275 327 335 (16)
shareholders
Number of shares in issue (000) 112,609 111,651 111,651 1
Weighted average number of
shares in issue (000)
- basic 111,085
112,123 110,980 1
- diluted 116,219
120,841 115,973 4
Headline earnings
per share (cents)
- basic 51.2 293.7
300.0 20
- diluted 325.9 280.7
287.1 16
Earnings per share
(cents)
- basic 295.2 (17)
245.3 301.8
- diluted 282.1 (19)
227.6 288.8
Distribution to 78
shareholders 94 78 21
(cents)
- Interim 47
57 47
- Final 31
37 31
Note 1 : 12 months actual to 31 August 2001 versus 12
months proforma to 31 August 2000
JD Group Balance Sheet
Audited Audited
31 August 2001 31 August 2000
R million R million
Assets
Non - current assets 224
269
Property, plant and 109
equipment 127
Goodwill
6 -
Share incentive
trusts 10 13
Investments
110 102
Deferred taxation
16 -
Current assets 4,270 3,286
Inventories 354
359
Accounts receivable 2,882
3,255
Taxation 9
1
Bank balances and 41
cash 655
Total assets 3,510
4,539
Equity and liabilities
Equity and reserves
Share capital and 762
premium 781
Non - distributable -
reserve 4
Retained income 924
1,093
Shareholders for 35
dividend 42
Shareholders' equity 1,721
1,920
Outside shareholders' (1) -
interest
Non - current 1,106
liabilities 1,577
Interest bearing 750
long term 1,261
liabilities
Deferred taxation 356
316
Current liabilities 683
1,043
Non interest bearing 679
722
Interest bearing
192
Taxation 4
125
Bank overdraft
4
Total equity and 3,510
reserves 4,539
Directors' valuation of 102
unlisted investments 110
Capital expenditure 15
authorised and 4
contracted
Capital expenditure 60
authorised but not yet 52
contracted
Operating lease 757
commitments 680
The Group has no other material commitments or
contingent liabilities.
Net asset value per 1,705.1 1,541.5
share (cents)
Gearing ratio (net) 41.8% 41.2%
JD Group Abridged Cash Flow Statement
Audited Unaudite Audited
d
Proforma
12 months 12 14 months
months
ended ended ended
31 August 31 31 August
2001 August 2000
2000
R million R R million
million
Cash generated by operations
541 588 615
Increase in working capital
(329) (539) (446)
Cash generated by operating activities
212 49 169
Investment income
8 7 7
Finance costs (101) (78) (88)
Taxation paid (45) (94) (120)
Cash generated by operating activities (116) (32)
74
Dividends paid (99) (80) (80)
Cash flows from operating activities (25) (196) (112)
Cash utilised in investing activities (65) (88) (175)
Proceeds on issue of shares (share
incentive trusts) 19 35 35
Net cash utilised (71) (249) (252)
Net borrowings and cash equivalents
at beginning of year (731) (460) (457)
Net borrowings and cash equivalents
at end of year (802) (709) (709)
Capital expenditure incurred
66 55 65
JD Group Statement of Changes in Equity
Share Share Non- Retaine Shareholder
distributabl d s
e
capita premium reserve income for To
l dividend
R R R million R R million R
millio million million millio
n n
Balance at 30 June
1999 5 722 676 28 1,431
Income
attributable 335 335
to
shareholders
Distributabl
e to (87) 87 -
shareholders
Paid to (28)
shareholders (28)
- 15 October
1999
Paid to
shareholders (52) (52)
- 12 April
2000
Issue of
share 35 35
capital
Balance at 31
August 2000 5 757 - 924 35 1,721
Income
attributable 275 275
to
shareholders
Distributabl
e to (106) 106 -
shareholders
Paid to
shareholders (35) (35)
- 15
December
2000
Paid to
shareholders (64) (64)
- 15 June
2001
Translation
of foreign 4 4
entity
Issue of
share 1 18 19
capital
Balance at 31
August 2001 6 775 4 1,093 42 1,920
