| Wed 16 Apr 2003, 17:13 | | Audited group results for the year ended |
|
Wetherlys Investment Holdings Limited -
Wetherlys Investment Holdings Limited
(Registration number 1996/016455/06)
Share code: WET ISIN: ZAE00001827
("Wetherlys")
Osiers
Cane & Linen
Audited group results for the year ended 28 February 2003
* Revenue up 34%
* Operating profit up 28%
* HEPS up 30%
SUMMARISED GROUP INCOME STATEMENT
Audited Audited
Year ended Year ended
28 February 28 February
2003 2002
R"000 R"000
Revenue 361 610 269 788
Operating income
before depreciation
and net finance 70 497 54 900
income
Depreciation (5 301) (3 912)
Operating income
before net
finance income 65 196 50 988
Net finance income 7 024 5 413
Net income before 72 220 56 401
taxation
Taxation (20 543) (16 897)
Net income after 51 677 39 504
taxation
Share of associated 202
company"s profits
Net income
attributable to
ordinary 51 879 39 504
shareholders
Number of shares in 130,1 127,7
issue (millions)
Weighted average
number of
shares (millions) 128,1 127,0
Earnings and
headline earnings
per share (cents) 40,5 31,1
ABRIDGED GROUP CASH FLOW STATEMENT
Audited Audited
Year ended Year ended
28 February 28 February
2003 2002
R"000 R"000
Cash generated from 28 456 54 451
operations
Net finance 7 024 5 413
income
Distribution to (8 939) (7 624)
shareholders
Taxation paid (17 789) (20 881)
Cash flows from 8 752 31 359
operating
activities
Cash flows from (26 541) (34 256)
investing
activities
Cash flows from 4 960 14 584
financing
activities
Proceeds from 4 695 1 993
share issue
Net loans raised 265 12 591
Net (12 829) 11 687
(decrease)/increase
in cash
Cash and cash
equivalents
beginning of year 77 562 65 875
Cash and cash 64 733 77 562
equivalents end of
year
SUMMARISED GROUP BALANCE SHEET
Audited Audited
28 February 28 February
2003 2002
R"000 R"000
Assets
Tangible fixed 104 344 89 601
assets
Intangible fixed 1 311 1 494
assets - trademarks
Deferred taxation 7 335 5 755
Investment in 3 941 2 368
associated company
Loan - share trust 8 879 5 075
Financial assets 4 801 4 314
Current assets 181 894 146 097
Inventory 97 226 55 165
Trade and other 19 935 13 370
receivables
Cash and short- 64 733 77 562
term funds
Total assets 312 505 254 704
Equity and
liabilities
Shareholders funds 232 333 185 588
Non-current 24 997 23 653
liabilities
Interest-bearing 23 616 23 522
Non-interest- 1 381 131
bearing
Current liabilities 55 175 45 463
Trade and other 46 587 42 628
payables
Short-term
portion of non-
current
liabilities 2 696 1 276
Taxation 5 892 1 559
Total equity and 312 505 254 704
liabilities
Net tangible asset
value per
share (cents) 177,6 144,2
STATEMENT OF CHANGES IN EQUITY
Audited Audited
Year ended Year ended
28 February 28 February
2003 2002
R"000 R"000
Balance at the 185 588 151 712
beginning of the
year
Attributable profit 51 879 39 504
Proceeds of share 4 695 1 993
issue
Ordinary dividend (7 621)
paid
Goodwill on (890)
acquisition written
off
Distribution out of
share
premium account (8 939)
Balance at the end 232 333 185 588
of the year
Commentary
Financial review
As the group celebrates 30 years of trading, we are pleased to report another
year of sustained growth in earnings. Revenue for the year increased 34% to
R361m, with operating income up 28% at R65,2m. Headline earnings per share
increased 30 % over the prior year to 40,5 cents. Since listing in 1997, the
cumulative annual growth has been 28,5% in turnover, and 25% in headline
earnings per share. This represents a sound track record, which we believe is
sustainable.
Operating margins increased in the second half of the year as expected. The
operating expenses for the year, however have been higher than in normal trading
conditions due to costs incurred in the establishment of the distribution centre
and change over to a new management information system. Significant investment
in resources was made during the transition phase to ensure continuity of
service and customer satisfaction. This was successful as all branches achieved
record turnovers and service levels were not impacted. The operations of the
distribution centre have settled down and the implementation of the new computer
system has been successful. Management is now in a position to reduce overheads
and capitalise further on cost savings expected from upgrading our operations
and systems.
There were significant investments made in the course of the year, the benefits
of which will for the most part be realised in the new year. Melville Dcor was
acquired at the beginning of the year and Wetherlys and Osiers also opened in
Wendywood and Nelspruit. At year end work in progress on major upgrades at Kya
Sands was well advanced. The above also account for a material portion of the
increase in inventory and the balance of the increase arises from the investment
in stock for the distribution centre. The planned investment in inventory was a
key component of the group"s operational strategy and management is satisfied
with the results. All fixed and working capital investments during the year were
funded out of cash resources; with the increase in inventory impacting the
reported cashflow from operating activities. Despite this, cash resources remain
strong and we expect reported cash generation relative to profits to be restored
to historic levels.
Accounting policies and information
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. Comparative figures have been
restated, where necessary, to conform with current year classifications. The
provisions of AC 133, Financial Statements: recognition and measurement, have
been considered, and the application of this statement has not resulted in any
adjustment to the group results.
The auditors, Fisher Hoffman PKF, have issued their opinion on the group"s
financial statements for the year ended 28 February 2003. A copy of their
unqualified report is available for inspection at the company"s registered
office.
Local operations
We previously reported that the distribution centre was the key factor in
upgrading our supply and delivery logistics to enable us to maintain service
levels in the growing business, locally and internationally. It became
operational on 1 September 2002 and its development since then, as well as the
switch over to the new management information system at year end, has taken the
company"s operations to a new level. Management is more confident growing the
business going forward from a stronger platform and support base. The new
infrastructure will more than adequately fulfill our requirements for the
foreseeable future.
All Wetherlys and Osiers stores traded in line with expectations. We are
satisfied with the performance of the new stores, particularly the new Wendywood
centre. The Melville Dcor acquisition has been successfully transformed into a
Wetherlys and has accordingly changed its trading style. The management of this
East Cape operation have been very successful in taking advantage of the
significant growth in vacation and golf estate developments in the area. We have
plans to further develop this area to maximise our opportunity there. The
renovations at Kya Sands are nearing completion. It is being transformed into a
lifestyle centre, the quality of which parallels the successful Palms Centre in
Cape Town. The extended Wetherlys and Osiers at the centre allow us to showcase
new and exciting product to complement the outdoor lifestyle of our customers.
The new East Rand centre comprising both Wetherlys and Osiers is scheduled to
open early in the second half of the year as is a new Osiers warehouse adjacent
to Wetherlys in Pretoria.
There is ongoing development of new products and designs. The group continues to
focus on exclusivity of product, be it locally or internationally sourced, and
lead the way in setting trends in our target market.
Roodefurn, the manufacturing arm, showed record profits for the year, ahead of
expectations. It capitalised on improved efficiencies and the ability to apply
economies of scale by supplying product for stock that was enabled by the
establishment of the distribution centre. Management is considering alternatives
to further utilise the capacity of the plant.
International operations
International expansion has been a stated strategy of the group and remains so.
However, since our last report the group has primarily focused its resources on
the roll out of the new management information system and establishment of the
distribution centre to facilitate more efficient future offshore developments.
Management will continue to explore overseas expansion and strategy in the year
ahead.
Our Spanish operation, whilst not material to group results, continues to grow
and is both profitable and cash positive.
Prospects
Management is satisfied the business will be able to show sustained growth in
the coming year despite challenging retail conditions. We expect to reap the
benefits of new stores and renovations completed in the period under review as
well as material cost savings arising out of our systems and operations
enhancements.
Directors and management
In the first half of the year we reported that David Jacobson had resigned and
Stephen Davies had become a non-executive director. In the second half of the
year Craig Schneeberger and Craig Rheeder were appointed to the board. These
appointments are testament to the efforts placed in succession planning in the
group. Barry Wood was appointed as an independent non-executive director to the
board and chairman of the audit and remuneration committees. Robin Brickhill,
who has completed a year with the group, has been appointed to the board as
financial director with effect from 16 April 2003. On 7 March 2003 Anthony
Morgan resigned from the board following the operations of Osiers being
integrated into that of Wetherlys at the distribution centre. Anthony made a
meaningful contribution to the group and we wish him well in his new ventures.
Development of management within the organisation continues to be a priority
particularly with the group showing sustained growth. Key internal appointments
during the year in both the retail and manufacturing arms provide confidence
that the group has more than adequate management resources to take the business
forward.
Capital distribution to shareholders
Subject to the approval by the shareholders at the company"s Annual General
Meeting being obtained, the directors have proposed a capital distribution
equivalent to 9 cents per share (2002: 7 cents per share) to be paid to
shareholders out of the company"s share premium account. A notice providing
salient dates for the capital distribution will be published in due course.
By order of the board
BD van der Merwe JA Smith
(Chairman) (Chief executive officer)
16 April 2003
Directors
BD van der Merwe, JA Smith, R Brickhill, NWG Davies, SJF Davies*, IC Heron*, CA
Rheeder, CP Schneeberger, BT Wood* (*non-executive directors)
Registered office
13 Springbok Road, Industria, 2093
Transfer secretaries
Computershare Investor Services Limited, PO Box 61051, Marshalltown, 2107
Sponsors
Nedbank Corporate
