| Mon 6 May 2002, 0:00 | | Jd Group - Reviewed Interim Results |
|
for the six months ended 28 February 2002
Trading environment and implications
* Difficult economic and trading conditions in local durable credit retail
market
* Conscious decision to protect the quality of Group assets in the long-term
* Tighter credit granting and review model to reduce risk exposure
* Consequential effects of the above:
- higher cash sales component
- increase in deposits
- decline in the number of creditworthy customers
- reduction in margins
Financial aspects
* Revenue up 8% to R2,1 billion
* Total sales of merchandise up 14% to R1,4 billion
* Growth in receivables book up 2%
* Gearing maintained at 43%
* Headline earnings per share down 37% to 125,7 cents
* Asset base strengthened
Income statement
Audited Reviewed Reviewed
12 months 6 months 6 months
ended ended ended
31 August 28 February 28 February
2001 2001 2002 Change
R million R million R million %
2 301 1 189 Sale of merchandise 1 352 14
738 364 Finance charges earned 384 5
560 312 Financial services 287 (8)
189 96 Other services 103 7
3 788 1 961 Revenue 2 126 8
1 530 779 Cost of sales 896 15
Operating income before
706 394 the following items: 263 (33)
51 24 Depreciation 28
- - Goodwill amortised 1
Surplus on disposal of property,
(2) (1) plant and equipment (2)
657 371 Operating income 236 (36)
(8) (4) Dividends received (4)
101 46 Finance costs - net 62 35
Income before loss
564 329 on discontinuance 178 (46)
167 - Loss on discontinuance -
397 329 Income before taxation 178
123 106 Taxation 37 (65)
274 223 Income after taxation 141
(1) - Attributable to
outside shareholders (1)
275 223 Income attributable
to shareholders 142 (36)
Reconciliation of
headline earnings
275 223 Income attributable
to shareholders 142
120 - Loss on discontinuance -
- - Goodwill amortised 1
Surplus on disposal
of property,
(1) (1) plant and equipment (1)
394 222 Headline earnings 142
112 609 112 062 Number of shares
in issue (000) 112 730 1
Weighted average number
of shares in issue (000)
112 123 111 939
- basic 112 688 1
120 841 120 161 - diluted 121 946 1
Earnings per share (cents)
245,3 199,3 - basic 125,5 (37)
227,6 185,6 - diluted 115,9 (38)
Headline earnings
per share (cents)
351,2 198,5 - basic 125,7 (37)
325,9 184,9 - diluted 116,1 (37)
94 57 Distribution to
shareholders (cents) 34 (40)
57 57 - Interim 34
37 - Final
17,3% 18,9% Operating margin 11,1% (41)
Balance sheet
Audited Reviewed Reviewed
31 August 28 February 28 February
2001 2001 2002
R million R million R million
Assets
269 233 Non-current assets 341
127 126 Property, plant and equipment 146
6 7 Goodwill 53
10 13 Share incentive trusts 10
110 80 Investments 110
16 7 Deferred taxation 22
4 270 3 790 Current assets 4 373
359 382 Inventories 444
3 255 3 371 Accounts receivable 3 439
1 1 Taxation 3
655 36 Bank balances and cash 487
4 539 4 023 Total assets 4 714
Equity and liabilities
Equity and reserves
781 770 Share capital and premium 782
4 4 Non-distributable reserve 29
1 093 1 083 Retained income 1 197
42 64 Shareholders for dividend 38
1 920 1 921 Shareholders' equity 2 046
(1) (1) Outside shareholders' interest 17
1 577 1 294 Non-current liabilities 1 485
1 261 889 Interest-bearing long-term
liabilities 1 155
316 405 Deferred taxation 330
1 043 809 Current liabilities 1 166
722 762 Non-interest-bearing 835
192 - Interest-bearing 206
125 47 Taxation 115
4 - Bank overdraft 10
4 539 4 023 Total equity and liabilities 4 714
110 80 Directors' valuation of unlisted
investments 110
4 - Capital expenditure authorised
and contracted -
Capital expenditure authorised
52 40 but not yet contracted 21
680 691 Operating lease commitments 845
The Group has no other material
commitments or
contingent liabilities.
1 705,1 1 713,9 Net asset value
per share (cents) 1 815,5
41,8% 44,4% Gearing ratio (net) 43,2%
Abridged cash flow statement
Audited Reviewed Reviewed
12 months 6 months 6 months
ended ended ended
31 August28 February 28 February
2001 2001 2002
R million R million R million
541 398 Cash generated by operations 263
(329) (431) Increase in working capital (192)
212 (33) Cash generated by
operating activities 71
(101) (46) Finance costs - net (62)
8 4 Dividends received 4
(45) (8) Taxation paid (38)
74 (83) (25)
(99) (35) Dividends paid (42)
(25) (118) Cash flows from
operating activities (67)
(87) (11) Cash utilised in
investing activities (136)
722 124 Cash utilised in
financing activities (91)
610 (5) Net decrease in cash
and cash equivalents (294)
Cash and cash equivalents
41 41 at beginning of period
and acquired 771
Cash and cash equivalents
651 36 at end of period 477
66 36 Capital expenditure incurred 38
Operating environment
During the period under review, market conditions in the durable credit
retail market remained under pressure and the overtraded environment
continued to impact negatively on product margin. Huge demands on the
disposable income of the Group's target market have further exacerbated the
situation.
Financial overview
On 28 January 2002, the Group informed the market of trading for the first
four months ending December 2001. It was announced that as part of the
Group's ongoing credit risk review and the development of its new credit
granting model, changes to the existing credit application and evaluation
process were put in place. These measures were introduced in November 2001
to reduce credit risk during the peak Christmas trading period.
The new credit granting process resulted in an increase in deposits and cash
sales and a consequent decline in Group finance income earned. While this
action has a short-term impact on revenue, it has reduced risk.
In accordance with its strategy, the Group maintained strict cost controls
relating to operating expenses for southern Africa, excluding marketing and
receivables related costs, increasing by a mere 3%. Marketing expenses for
the period grew by 14%, a strategy adopted to compensate for the anticipated
impact of the more stringent credit granting criteria.
During the period under review, the Group increased revenue by 8% to R2,1
billion (2001: R1,9 billion). Attributable income decreased 36% and earnings
of R142 million (R223 million) were reported. Headline earnings per share
declined 37% to 125,7 cents (198,5 cents).
Total sales of merchandise increased by a pleasing 14% to R1,4 billion.
Local sales increased by 4% (like-on-like growth of 5% was achieved). Cost
of sales increased in line with the increase in sale of merchandise.
Operating income decreased 36% to R236 million (2001: R371 million).
Finance charges earned grew 5%, in line with local credit sales. Financial
services decreased by 8% due largely to an increase in cash sales from 15%
to 20% and growth in average deposits from 11% to 14%.
Receivables grew 2% year on year. The average length of the book shortened
to 15,4 months compared with 16,2 months reported at the previous year end.
Net cash generated improved by R104 million over the comparative period.
Cash tax payments increased substantially by R30 million reflecting the
marginal growth of receivables and the consequent reduction in Section 24
allowances. Cash utilised in investing activities increased by R125 million,
of which R102 million related to the acquisition and funding of BoConceptr.
Cash utilised in financing activities of R91 million related to the
redemption of interest-bearing borrowings.
Gearing of 43,2% remains well within the Group's stated gearing range
objective of 35% to 50%.
The arrears percentage remained at similar levels to that of the comparative
period. An additional R88 million was expended in insurance premiums for bad
debts, bad debt provisions and write-offs. Insurance cover for the Group's
South African bad debts continues to be adequate.
Total inventories increased by 16%. Inventories for southern Africa were
maintained at similar levels to those of the comparative period after taking
into account inflation of 8% over the full range of products. Total
inventories of R444 million include both Abra and BoConceptr.
Outlook for local durable credit retail market
In order to more accurately assess a potential customer's ability to service
additional debt, an extensive study of a representative sample of the
Group's debtors across all brands was conducted. This process was assisted
by the Group's Enterprise Data Warehouse (EDW) on customer and product
information. The results showed that more stringent credit vetting was no
longer an answer in itself as increasingly more debtors now fall within the
gap between traditional credit bureau services and the micro lending
industry.
The next phase of the credit risk review process was implemented in March
this year with individual branch credit scoring, taking into account the
effectiveness of each branch's ability to manage its receivables. This
process has been successful in predicting the payment behaviour of debtors
with a particular status in a specific geographical area. This has resulted
in a reduction of risk allowing for greater levels of predictability at
store level.
Our investment in EDW positions the Group well to leverage off the vital
business tools and processes in place. The Group's technology and user-
friendly information is a key differentiator.
Nedcor alliance
During the period, R119 million in loans was generated through 178 Peoples
Bank "in-store points of presence". The Group is expected to have a total of
200 "in-store points of presence" by the end of the calendar year.
The anticipated contribution from this alliance will not materialise in the
current financial year. This is due in the main to a delay in the rollout of
additional products as prevailing economic circumstances necessitate a more
cautious approach. Month-on-month growth confirms the potential of this
venture and a meaningful contribution can be expected in the next financial
year. All parties concerned are positive regarding the alliance's ability to
generate future profits.
Poland
The Group is pleased to report revenue growth from R27 million to R117
million for the period under review. Like-for-like sales grew by 50% (an
average rand rate of exchange to zloty of 2,5 was used).
The Group's newer stores yield a 10% return on sales. Of the 22 existing
stores, eight do not as yet make an income contribution.
The opportunity remains to increase margins. Ongoing attention will also be
placed on the training and development of local staff. This operation is
expected to make a positive contribution within the next financial year.
United Kingdom
The integration of the recently acquired BoConceptr stores has been
successfully completed. Revenue of R26 million was achieved for the period
under review (an average rand rate of exchange to sterling of 14,8 was
used).
A store was opened in Brighton on 27 December 2001 and a fourth store was
recently opened in Southampton. Stores in Cardiff and Glasgow will open
within the calendar year and additional opportunities are being pursued.
The Group remains confident that BoConceptr presents a unique and lucrative
opportunity for the Group's global expansion.
Group prospects
The trading conditions experienced during this period are expected to
continue for the balance of the financial year. While the short to medium-
term future for the local durable credit retail market will remain
constrained, the Group is well positioned to prosper beyond the short-term
vagaries of the market. The focus will remain on strengthening the quality
of the Group's asset base without losing market share. The actions taken and
those to follow will clearly prove that management remains committed to the
delivery of sustainable, above-average earnings growth in the long-term. The
2003 financial year will reap the benefits from the Nedcor alliance and the
Group's expansion in Poland and the United Kingdom.
Dividend
The directors have resolved to declare dividend No. 37 of 34 cents (2001:
57 cents) per ordinary share, being the interim dividend for the six months
ended 28 February 2002.
The last day to trade "CUM" dividend will be Friday, 17 May 2002. The shares
of JD Group will commence trading "EX" dividend from the commencement of
business on Monday, 20 May 2002, and the record date will be Friday, 24 May
2002. The dividend will be paid on Monday, 27 May 2002. Share certificates
may not be dematerialised or rematerialised between Monday, 13 May 2002 and
Friday, 24 May 2002, both days inclusive.
Review by the independent auditors
The financial information has been reviewed, but not audited, by Deloitte &
Touche, whose unqualified review report is available for inspection at the
company's registered office.
For and on behalf of the board
David Sussman Gerald V lkel
Executive Chairman Financial Director
Johannesburg
3 May 2002
Statement of changes in equity
Non-distri- Share-
Share Share butable Retained holders for
Capital premium reserve income dividend Total
R R R R R R
Mil- Mil- Mil- Mil- Mil- Mil-
Lion lion lion lion lion lion
Balance at
31 August 2000 5 757 - 924 35 1 721
Income
attributable
to shareholders 223 223
Distributable
to shareholders (64) 64 -
Paid to shareholders (35) (35)
Translation of
foreign entity 4 4
Issue of share
capital 1 7 8
Balance at
28 February 2001 6 764 4 1 083 64 1 921
Income attributable
to shareholders 52 52
Distributable
to shareholders (42) 42 -
Paid to shareholders (64) (64)
Translation of
foreign entity -
Issue of
share capital 11 11
Balance at
31 August 2001 6 775 4 1 093 42 1 920
Income attributable
to shareholders 142 142
Distributable
to shareholders (38) 38 -
Paid to shareholders (42) (42)
Translation of
foreign entity 25 25
Issue of
share capital 1 1
Balance at
28 February 2002 6 776 29 1 197 38 2 046
Accounting policies: The accounting policies used in the preparation of the
interim profit announcement are consistent with those applied in the
previous year ended 31 August 2001.
Segmental analysis - 6 months ended 28 February 2002
Joshua Price 'n
Russells Doore Bradlows Pride
6 months
ended 28 February 2002
Revenue Rm 726 522 320 252
Operating income Rm 138 74 46 (7)
Depreciation Rm 1 1 1 1
Total assets Rm 1 326 930 587 685
Total current
liabilities Rm 217 177 111 67
Capital expenditure Rm 1 1 1 -
Operating margin % 19,0 14,2 14,4 (2,9)
Cash price sales Rm 442 325 208 131
Share of group
sale of merchandise % 32,6 24,1 15,4 9,7
Number of stores 194 146 94 132
Revenue per store R000 3 744 3 578 3 399 1 907
Retail square meterage 132 735 115 353 67 027 71 116
Revenue per
square metre Rand 5 472 4 529 4 767 3 541
Number of employees 2 775 2 291 1 492 2 049
Revenue per employeeR000 262 228 214 123
Bad debts written off as a
percentage of gross
receivables % 4,4 3,4 2,5 7,4
Debtors' arrears % 12,2 10,9 10,6 26,0
Average length of
the book Months 14,8 14,8 13,6 19,5
6 months ended
28 February 2001
Revenue Rm 673 474 296 344
Operating income Rm 175 91 55 51
Depreciation Rm 1 1 1 1
Total assets Rm 1 175 835 541 908
Total current
liabilities Rm 185 144 84 93
Capital expenditure Rm 1 - - -
Operating margin % 26,0 19,1 18,7 14,9
Cash price sales Rm 407 292 186 182
Share of group sale
of merchandise % 34,3 24,6 15,6 15,3
Number of stores 190 141 91 170
Revenue per store R000 3 545 3 362 3 255 2 021
Retail square meterage 130 725 111 836 65 732 92 970
Revenue per metre Rand 5 152 4 239 4 507 3 695
Number of employees 2 764 2 262 1 542 2 432
Revenue per
employee R000 244 210 192 141
Bad debts written
off as a
percentage of
gross receivables % 1,4 2,1 1,5 2,4
Debtors' arrears % 10,4 10,9 10,7 25,2
Average length
of the book Months 14,1 14,1 13,6 20,6
Giddys
Electric
Express Abra BoConcept Corporate Group
6 months ended
28 February 2002
Revenue Rm 163 117 26 2 126
Operating
income Rm 23 (9) (3) (26) 236
Depreciation Rm - 1 1 22 28
Total assets Rm 249 81 154 702 4 714
Total current
liabilities Rm 46 40 22 486 1 166
Capital
expenditure Rm - 4 4 27 38
Operating
margin % 14,3 (7,9) (12,5) 11,1
Cash price
sales Rm 105 115 26 1 352
Share of
group sale
of merchandise% 7,8 8,5 1,9 100,0
Number of stores 111 22 3 702
Revenue per
store R000 1 470 5 322 8 605 3 029
Retail square
meterage 17 290 25 189 2 137
Revenue per
square metre
Rand 9 435 4 648 12 080
Number of
employees 694 347 58 304 10 010
Revenue per
employee R000 235 337 445 212
Bad debts written
off as a
percentage of
gross receivables % 1,7 4,1
Debtors' arrears % 6,5 13,7
Average length of
the book Months 13,2 15,4
6 months ended
28 February 2001
Revenue Rm 147 27 1 961
Operating
income Rm 25 - (26) 371
DepreciationRm - - 20 24
Total assetsRm 221 50 293 4 023
Total current
liabilities Rm 52 18 233 809
Capital
expenditure Rm - 2 33 36
Operating
margin % 16,9 0,0 18,9
Cash price
sales Rm 95 27 1 189
Share of group sale
of merchandise % 7,9 2,3 100,0
Number of stores 101 18 711
Revenue per
store R000 1 458 1 494 2 759
Retail square
meterage 16 289 21 331
Revenue per
metre Rand 9 041 1 261
Number of employees 658 316 302 10 276
Revenue per
employee R000 224 85 191
Bad debts written
off as a
percentage of
gross receivables % 0,8 1,7
Debtors' arrears % 5,2 13,8
Average length of
the book Months 12,4 14,8
Segmental analysis - year ended 31 August 2001
Joshua Price
Russells DooreBradlows 'n Pride
Year ended 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
Share of group sale
of merchandise % 33,5 24,5 15,9 7,6
Number of stores 191 142 92 131
Revenue per store R000 6 738 6 451 6 283 2 672
Retail square meterage 131 185 112 327 66 472 75 107
Revenue per
square metre Rand 9 811 8 155 8 695 4 660
Number of employees 2 667 2 221 1 483 2 339
Revenue per employee R000 483 412 390 150
Bad debts written
off as a percentage of
gross receivables % 3,5 4,3 3,4 5,0
Debtors' arrears % 11,6 10,8 10,5 21,1
Average length of
the book Months 15,0 14,8 13,9 20,4
Giddys
Electric
Express Score AbraCorporate Group
Year ended 31 August 2001
Revenue Rm 289 270 98 3 788
Operating income Rm 43 40 (11) (89) 657
Depreciation 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 % 14,8 14,9 (11,4) 17,3
Cash price sales Rm 185 144 97 2 301
Share of group
sale of merchandise % 8,0 6,3 4,2 100,0
Number of stores 109 19 684
Revenue per storeR000 2 651 5 158 5 538
Retail square meterage 16 930 18 586
Revenue per square
metre Rand 17 070 5 273
Number of employees 676 253 345 9 984
Revenue per
employee R000 428 387 379
Bad debts
written off
as a percentage of
gross receivables % 1,7 3,9
Debtors' arrears % 5,8 13,1
Average length of
the book Months 12,9 16,2
JD Group Limited: Registration number: 1981/009108/06 Share code: JDG, ISIN
code: ZAE000030771 E-mail: info@jdg.co.za Registered office: 11th Floor, JD
House, 27 Stiemens Street, Braamfontein, Johannesburg, 2001 (PO Box 4208,
Johannesburg, 2000) Telephone: +27 11 408-0408 Telefax: +27 11 408-0604
Transfer secretaries: South Africa - Computershare Services Limited, 2nd
Floor, Edura House, 41 Fox Street, Johannesburg, 2001 (PO Box 61051,
Marshalltown, 2107) Telephone: +27 11 370-7700 Telefax: +27 11 688-7716
Namibia - Transfer Secretaries (Proprietary) Limited, Shop 132, Kaiserkrone
Centre, Post Street Mall, Windhoek, Namibia (PO Box 2401, Windhoek, Namibia)
Telephone: +264 61 227647 Telefax: +264 61 248531
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)
The power behind world-class brands
www.jdg.co.za
e-mail: info@jdg.co.za
