| Tue 15 Apr 2003, 12:17 | | Ellerine Holdings Limited - Unaudited Interim Prof |
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Ellerine Holdings Limited
Registration number 1968/013402/06
Share code: ELH ISIN number: ZAE000022752
Unaudited Interim Profit Statement
for the six months ended 28 February 2003
* Turnover up 9% to R1,1 billion
* Headline earnings per share up 15,3% to 162,4 cents
* Net asset value per share up 12,7% to 2 023 cents
* Strong ungeared balance sheet
CONSOLIDATED INCOME STATEMENT
6 months to February 12 months to
2003 2002 % August 2002
R"000 R"000 Change R"000
Unaudited Unaudited Audited
Turnover 1 144 208 1 049 844 9,0 2 025 946
Cost of sales 473 355 448 219 5,6 791 177
Gross profit 670 853 601 625 11,5 1 234 769
Operating expenses 494 497 456 436 8,3 932 918
Operating profit before
foreign exchange
adjustment 176 356 145 189 21,5 301 851
Foreign exchange
translation
(loss)/profit (6 709) 4 403 4 743
Operating profit after
foreign exchange
adjustment 169 647 149 592 13,4 306 594
Net investment income 7 853 1 876 318,6 7 196
Profit before taxation
and abnormal items 177 500 151 468 17,2 313 790
Impairment of owner
occupied properties - - (6 237)
Adjustment to fair value
of investment properties - - 777
Profit before taxation 177 500 151 468 308 330
Taxation (55 691) (45 597) 22,1 (97 662)
Profit after taxation 121 809 105 871 15,1 210 668
Determination of
headline earnings
Profit after taxation 121 809 105 871 210 668
Impairment of owner
occupied properties - - 6 237
Adjustment to fair value
Of investment properties - - (777)
Net profit on disposal
of assets (2 803) (2 778) (6 158)
Tax effect thereon 841 833 1 847
Headline earnings 119 847 103 926 15,3 211 817
Number of ordinary shares:
In issue 73 805 200 73 805 200 73 805 200
Fully diluted weighted
average 74 128 100 74 411 492 74 232 923
Earnings per share: Cents Cents Cents
Basic 165,0 143,4 15,1 285,4
Headline 162,4 140,8 15,3 287,0
Fully diluted basic 164,3 142,3 15,5 283,8
Fully diluted headline 161,7 139,7 15,8 285,3
CONSOLIDATED BALANCE SHEET
February February August
2003 2002 2002
R"000 R"000 R"000
Unaudited Unaudited Audited
Assets
Non-current assets 514 360 460 826 415 703
Property and equipment 130 864 144 405 133 679
Investments at bankers 286 311 231 421 197 024
Other financial assets 97 185 85 000 85 000
Current assets 1 818 119 1 764 707 1 761 040
Inventories 135 041 127 082 117 542
Trade receivables 2 314 616 2 140 058 2 116 284
Provisions (747 162) (669 266) (685 876)
1 567 454 1 470 792 1 430 408
Term loans 75 827 89 741 85 962
Provisions (40 103) (43 066) (46 077)
35 724 46 675 39 885
Other receivables 31 864 21 148 47 148
Funds on call, bank balances
and cash 48 036 99 010 126 057
Total assets 2 332 479 2 225 533 2 176 743
Equity and Liabilities
Shareholders" equity 1 493 028 1 325 080 1 431 750
Non-current liabilities 367 158 353 062 360 477
Insurance reserves 44 724 43 826 43 347
Deferred taxation 239 284 227 236 233 597
Interest bearing borrowings 83 150 82 000 83 533
Current liabilities 472 293 547 391 384 516
Trade and other payables 144 524 189 267 205 961
Bank overdrafts 327 769 358 124 178 555
Total equity and liabilities 2 332 479 2 225 533 2 176 743
Net asset value per share - cents 2 023 1 795 1 940
Current ratio 3,8 3,2 4,6
Net interest bearing debt: Equity (1,4%) 1,9% (10,2%)
CONSOLIDATED CASH FLOW STATEMENT
February February August
2003 2002 2002
R"000 R"000 R"000
Unaudited Unaudited Audited
Cash generated from operating
activities 224 079 223 414 432 342
Working capital changes (203 880) (208 819) (227 511)
Cash generated from operations 20 199 14 595 204 831
Exchange rate difference on
translation of net
foreign assets (6 653) 16 015 17 888
Net investment income 7 853 1 876 7 196
Taxation paid (80 833) (38 569) (55 135)
Dividends paid (53 854) (52 780) (52 821)
Cash flows from operating
activities (113 288) (58 863) 121 959
Net investing activities (24 277) (12 169) (22 932)
(Decrease)/Increase in interest
bearing borrowings (383) - 2 160
Net decrease in cash and
cash equivalents (137 948) (71 032) 101 187
Cash and cash equivalents at the
beginning of the period 144 526 43 339 43 339
Cash and cash equivalents at
the end of the period 6 578 (27 693) 144 526
Attributable cash flow per
share (cents) (80,5) (8,2) 236,8
STATEMENT OF CHANGES IN EQUITY
Non-
distrib- Distrib- 6 months 6 months
Share Share utable utable February February
R"000 capital premium reserves reserves 2003 2002
Balance at
31 August 2001 3 690 40 586 24 295 1 187 468 1 256 039 1 066 578
Net profit for
the period 210 668 210 668 210 479
(Loss)/Gain arising
on exchange rate
difference in the
translation of
net foreign assets 17 888 17 888 9 759
Transfer of revalution
of investment
properties to non-
distributable reserves 777 (777) - -
Dividend paid (52 845) (52 845) (30 777)
Balance at
31 August 2002 3 690 40 586 42 960 1 344 514 1 431 750 1 256 039
Net profit for
the period 121 809 121 809 105 871
(Loss)/Gain arising
on exchange rate
difference in the
translation of
net foreign assets (6 653) (6 653) 16 015
Dividend paid (53 878) (53 878) (52 845)
Balance at
28 February 2003 3 690 40 586 36 307 1 412 445 1 493 028 1 325 080
ACCOUNTING POLICIES
The interim report is prepared on the historic cost basis, except in the case of
certain investment properties that are carried at fair value, and comply in all
material respects with South African Statements of Generally Accepted Accounting
Practice.
The accounting policies applied are consistent with those of the previous
period. In preparing the report, cognisance has been taken of AC133, Financial
Statements: Recognition and Measurement which has introduced a comprehensive
framework for all financial instruments, including receivables. In view of the
fact that the group adopts the effective interest rate method for the purpose of
determining the unearned finance charge provision required for receivables and
the fact that the provision for bad debts is adequate to cover any potential
impairment of delinquent accounts, application of this statement did not result
in any adjustment to the group"s results.
DIVIDEND
The Group"s policy is to declare one dividend per annum, payable in December
each year.
COMMENTS
Strong operating performance
The 9% growth in Group turnover includes a pleasing increase in the value of
goods sold for the first time in a number of years. Operating profits at R176,3
million before exchange losses, increased by 21,5% due to higher finance charges
earned and the growth in sales volumes, despite the poor performance of the
foreign operations. The implementation of the strategic Business Units has
resulted in a significant improvement in the trading performance of the RSA
stores. The amount invested in Rainbow Loans, which is operating satisfactorily
and producing positive cash flows, reduced from R43,4 million to R25,8 million.
Current year"s overheads are up 5,7% which is well below inflation and the
turnover increase. Operating margin, before exchange losses, showed an
excellent improvement to 15,4% from 13,8%. Headline earnings at 162,4 cents per
share grew by 15,3%.
Positive operational cash flow and ungeared balance sheet
Cash generated from operations increased by 38% to R20,2 million. The net cash
balance of R6,6 million compares favourably against net borrowings of R27,7
million at February 2002. This pleasing result was achieved after financing the
purchase of shares to the value of R15 million for the group employee share
scheme. The balance sheet is ungeared, with total assets of R2,3 billion and a
net asset value of 2 023 cents per share, an increase of 12,7%.
Strategic business units capitalise on brand strengths
The operating structure has been further streamlined and the Group now targets
its traditional market only through the Ellerines and Town Talk brands. The
FurnCity brand focuses on the middle to upper income groups. With effect from
March 2003, Botswana, Lesotho, Namibia and Zambia now comprise a dedicated
Business Unit.
Effective working capital management
The insistence on full deposits for all sales coupled with centralised credit
granting, restricted the increase in gross debtors to 8%, despite an increase in
arrears from 23,7% to 26,4%.
Inventory levels remain under control and reflect a reduced obsolescence
content.
Investment in financial services group
Subsequent to 28 February 2003, the group has contracted to acquire, at a cost
of R23,5 million, a 37,5% equity state in CICL Investment Holdings (Pty) Limited
("CICL"). This company operates in the short and long term insurance markets as
well as in various related businesses. This transaction is subject to
Competition Board approval. CICL is positioned as a niche player in the
financial services market and has potential for good growth.
Share buy back
Pursuant to the authority granted to it at the company"s Annual General Meeting
in December 2002, the board has resolved to embark on a general repurchase
programme of the company"s shares.
Prospects
The disposable income in our target market should increase substantially as a
result of the reduced tax rates and the capital infrastructure spending
announced by Government in the recent Budget. This, together with the
rationalisation which is currently underway in the industry, should contribute
to a more favourable trading environment. Given these factors, the increase in
earnings achieved should be sustained for the remainder of the year, despite the
present global uncertainty.
By order of the Board
Denzil McGlashan Peter Squires
Chairman Chief Executive Officer 15 April 2003
Registered Office: Gillooly"s View Office Park, Block E, Osborne Lane,
Bedfordview 2008
Transfer secretaries: Computershare Investor Services Limited, 70 Marshall
Street, PO Box 61051, Marshalltown, 2107
Auditors: Grant Thornton Kessel Feinstein
Sponsors: Nedbank Corporate
Directors
DS McGlashan* (Chairman), Pjc Squires (Chief Executive Officer),
TJ Chalmers*, J Dritz**, PN Gumede*, HL Mmatli, RA Rawlings, PEI Swartz*, AR
van den Borne
(Non-executive*) (Company Secretary**)
Visit our website: www.ellerines.co.za
