| Thu 9 May 2002, 0:00 | | Wetherlys Investment Holdings Limited - Audited |
|
Ended 28 February 2002
WETHERLYS INVESTMENT HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration No. 1996/016455/06)
(Share code: WET) (ISIN ZAE000014411)
AUDITED ANNUAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2002
- TURNOVER UP 22%
- OPERATING INCOME UP 29%
- HEADLINE EPS UP 22%
SUMMARISED GROUP BALANCE SHEET
Audited Audited
28 Feb 28 Feb
2002 2001
R'000 R'000
ASSETS
Tangible fixed assets 89 601 63 408
Intangible fixed assets - 1 494 1 494
trademarks
Deferred taxation 5 755 3 430
Long term loans 7 443 4 000
Financial investments 36 410 45 890
Current assets 114 001 79 871
Inventory 55 165 46 548
Accounts receivable 13 370 8 816
Bank balances 45 466 24 507
TOTAL ASSETS 254 704 198 093
EQUITY AND LIABILITIES
Shareholders' funds 185 588 151 712
Non-current liabilities 23 653 11 062
Current liabilities 45 463 35 319
Accounts payable 42 628 28 427
Short term portion of long 1 276 2 651
term liabilities
Taxation payable 1 559 3 216
Bank overdraft 1 022
Shareholders for dividends 3
TOTAL EQUITY AND 254 704 198 093
LIABILITIES
Net asset value per share 145.3 119.8
(cents)
SUMMARISED GROUP INCOME STATEMENT
Audited Audited
Year Year
ended ended
28 Feb 28 Feb
2002 2001
R'000 R'000
Turnover 269 788 220 644
Operating income before 58 041 44 974
depreciation, net finance
income.
- Depreciation (3 911) (3 084)
Operating income before
net finance 54 130 41 890
income
2 271 4 515
- Net finance income
- Investment income 3 167 5 028
- Interest paid (896) (513)
Net income before 56 401 46 405
taxation
Taxation (16 897) (14 352)
Net income attributable 39 504 32 053
to ordinary shareholders
Number of shares in issue 127.7 126.6
(m)
Weighted average number 127.0 126.4
of shares (m)
Earnings per share 31.1 25.4
(cents)
Headline earnings per 31.1 25.4
share (cents)
Ordinary dividends 7 621 -
declared (R'000)
Dividends per share 6.0 -
(cents)
STATEMENT OF CHANGES IN EQUITY
Audited Audited
Year Year
ended ended
28 Feb 28 Feb
2002 2001
R'000 R'000
Balance at beginning of 151 712 119 834
the year
Attributable profit 39 504 32 053
Proceeds of share issue 1 993 824
Change in accounting (999)
policy
Ordinary dividend (7 621)
declared
Balance at the end of the 185 588 151 712
year
ABRIDGED GROUP CASH FLOW STATEMENT
Audited Audited
Year ended Year
28 Feb ended
2002 28 Feb
R'000 2001
R'000
Cash generated from 54 451 42 638
operations
Net interest income 2 271 4 515
Net dividends paid (4 482) (6 314)
Taxation paid (20 881) (12 400)
Cash flows from operating 31 359 28 439
activities
Cash flows from investing (23 961) (66 276)
activities
Cash flows from financing 14 583 9 140
activities
Net increase in cash 21 981 (28 697)
Bank balances at beginning 23 485 52 182
of year
Bank balances at end of the 45 466 23 485
year
REVIEW
It is pleasing to once again report on a positive set of results for the
year ended 28 February 2002.
Turnover for the year increased 22% to R269.8m (2001:R220.6m) with headline
earnings per share increasing 22% to 31.1 cents per share (2001: 25.4
cents). Operating income increased 27% to R54.1m (2001:R41.9)
Operating margins have been well maintained at 20% (2001:18.9%) and going
forward all signs suggest that margins will be maintained at the present
levels.
The rand dollar exchange rate deteriorated considerably during the year
under review. It should be noted however that approximately 8% of Wetherly's
purchases are represented by imported merchandise which is not a significant
percentage. To counteract the decline in the exchange rate, much emphasis
has been placed on local manufacture, with many of the products that were
imported in the past, now being produced locally.
The increased stock holding is attributed mainly to the stocking of both the
new Osiers warehouses situated in Cape Town and Durban which opened for
trade in May and October 2001 respectively.
Cash balances have improved substantially which is line with the group's
aggressive working capital management policies. Development of the Palms
Lifestyle Center in Cape Town is also nearing completion which has
contributed to the improved cash flow.
WETHERLYS
All Wetherlys stores traded in line with expectations
The relocation of the Cape Town store, to the group owned development
situated in the Palms Lifestyle center in Woodstock, has been well received
and sustained growth is anticipated from both Wetherlys and Osiers.
Shortly after year end, three existing decor stores were acquired in the
Eastern Cape region. The stores presently trade under the name Melville
Decor and have established substantial goodwill in the region. As a result
of this acquisition, a presence has been achieved in Knysna, George and
Plettenberg Bay. This region is presently experiencing rapid growth and
development and continued growth is anticipated. In time the stores will be
re-branded as Wetherlys.
The relocation of the Wendywood warehouse will be completed in May 2002. The
new site, adjacent to the M1 motorway, will in addition to a Wetherlys
warehouse, include an Osiers warehouse. The development is a substantial
improvement on the old Wetherlys store and promises to make an exciting and
unique shopping experience. Volumes should benefit as a result.
Construction of the new Nelspruit warehouse is now well advanced and is
scheduled for opening in August 2002.
Both a Wetherlys and an Osiers warehouse will be accommodated in Nelspruit.
Discussions with a leading, niched financial institution recently resulted
in a formalised agreement whereby Wetherlys and Osiers have been selected as
one of a select few merchant participants on their credit card loyalty
program. The benefits for the group from a marketing perspective are
meaningful as the target market is very closely aligned to our customer
base.
INTERNATIONAL EXPANSION
The continued success in Spain led to the formalisation of the distribution
agreement during the year.
Leasehold premises have been developed and the store officially opened in
early May 2002. Reaction to the product and the concept has been
exceptionally encouraging and indications are that the store will trade
above original expectations. The weakened rand has enabled the product to
command margins in excess of those achieved locally, yet still remain highly
competitive.
The group's approach to overseas expansion has always and remains extremely
conservative.
Distribution agreements with established and approved agents are initially
entered into and the market response gauged.
OSIERS
The Osiers contribution to turnover was 13% and to profit before tax was 8%.
The Osiers brand continues to grow from strength to strength and has been a
resounding success to date.
The availability of good quality, reasonably priced cane furniture has been
limited and the Osiers stores have capitalised on this lucrative gap in the
market. In addition to the cane range of furniture, Osiers has concentrated
on developing a niched variety of decorative accessories including pure
cotton linens, bed wear, soaps and candles.
The two new Osiers warehouses that opened during the year, namely Cape Town
and Durban continued to trade well above expectation in the second half of
the year and indications are for continued growth. The unique product ranges
have provided a successful recipe for a one-stop product service to our
customers.
The two new stores planned for opening in 2002, namely Wendywood and
Nelspruit, are well advanced and will take the total number of Osiers stores
to five.
Plans are being assessed for an Osiers warehouse in Pretoria as well as the
East Rand of Johannesburg
Operating margins in the Osiers division should improve further over time as
the store volumes increase.
ROODEFURN
The manufacturing subsidiary, Roodefurn, contributed 8.5% to total profit
before tax and produced a record year in terms of profit performance.
Production efficiencies continue to improve and the factory is currently
working additional shifts to keep abreast of demand.
Roodefurn plays an important role within the group and this role is becoming
more evident as the local substitution of imported product gathers momentum.
Roodefurn has recently invested in new plant and machinery and is thus well
equipped to meet both local and international anticipated future production
demands.
PROPERTY INITIATIVES
With overseas expansion now a clearly stated strategy and local volumes
increasing simultaneously, it has become clear that the present space
allocated to Gauteng and international dispatch, is insufficient.
The concept of a large distribution center is currently being investigated
that will provide sufficient space for the planned growth in volumes for the
foreseeable future.
The letting of the balance of the space in the Palms center in Cape Town has
surpassed all expectations and to date 95% of such space has been let.
ACCOUNTING POLICIES AND INFORMATION
Save for adjustments to the calculation of depreciation on buildings
described below, the accounting policies and methods of computation used are
consistent with those applied in the previous year and comply with the South
African Statements of Generally Accepted Accounting Practice.
In order to comply with revised Statements of Generally Accepted Accounting
Practice, the group has made the following change to its accounting policy
for depreciating buildings other than investment buildings. Buildings were
not previously depreciated and are now depreciated over the useful life in
terms of Statement AC 123. The change has been made retrospectively and
adjustments made to prior year information. The after tax impact is a
reduction in attributable earnings of R 596 823 (2001: R 586 744).
At year end the Company had no material committed capital expenditure. There
were no contingent liabilities at year end.
GENERAL REVIEW
The year under review was an exciting and challenging year as in addition to
the new store rollouts, the warehouse concept was expanded to new levels.
Space utilisation and product displays have been maximised to offer a unique
shopping experience.
Import replacements from local manufacturers have provided Wetherlys with a
price advantage on product that previously would have been susceptible to
exchange rate fluctuations.
The 2003 year should prove to be an exciting year as the group explores the
offshore market and continues to gain market share locally.
I would like to take this opportunity to thank all members of the board,
staff, suppliers and customers on whom we depend on for our continued
success.
CAPITAL DISTRIBUTION TO SHAREHOLDERS
Notice is hereby given that the directors have proposed a final capital
distribution of 7.0 cents per ordinary share for the 12 months ended
28 February 2002 payable to all shareholders of Wetherlys recorded on the
books of the company at the close of business on Friday 16 August 2002
("capital distribution"), subject to the approval of shareholders at the
Annual General Meeting on Tuesday 30 July 2002. The last day to trade cum
capital distribution is on Thursday 8 August 2002. Shares will commence
trading ex capital distribution from Monday 12 August 2002. The capital
distribution is payable on Monday 19 August 2002. Share certificates may not
be dematerialised and/or rematerialised between Friday 2 August 2002 and
Friday 16 August 2002, both days inclusive.
For and on behalf of the board
B van der Merwe DG Jacobson CA(SA)
Chairman Group Secretary
09 May 2002
Directors:
NWG Davies, SJF Davies, JA Smith, BD Van der Merwe, DG Jacobson CA (SA), AM
Morgan, I Heron*
(*Non-executive director)
Registered office: Cnr. Hans Strydom Drive & Precision Road, Kya Sands,
Randburg
Transfer secretaries: Mercantile Registrars Limited, 11 Diagonal Street,
P.O. Box 1053, Johannesburg, 2000
Sponsor: ENF Sponsors, 4th floor The Forum, 2 Maude Street, Sandown
Ends.
