CASHBUILD LIMITED - CASHBUILD 1ST QUARTER OPERATIONAL UPDATE AND CAUTIONARY
ANNOUNCEMENT
CASHBUILD LIMITED
(Registration number: 1986/001503/06)
(Incorporated in the Republic of South Africa)
JSE share code: CSB ISIN: ZAE000028320
(`Cashbuild` or `the company`)
CASHBUILD 1ST QUARTER OPERATIONAL UPDATE AND CAUTIONARY ANNOUNCEMENT
In line with past disclosure, the Cashbuild board provides the following
quarterly trading update.
Cashbuild has continued to see healthy revenue growth of 20% in comparison to
the first quarter of last year.
Of the overall increase, 11% is attributable to stores in existence since the
beginning of the prior reporting period (pre-existing stores) and 9% is
attributable to growth through new stores opened since the end of the 2003
financial year (new stores). This robust growth is again attributable to the
prevailing strong macroeconomic fundamentals, consumer confidence and the
property culture being experienced throughout southern Africa. These increases
are further under-pinned by strong growth in the number of transactions through
our tills of 17% and an increase of 26% in the number of product units sold, in
comparison to the 1st quarter of last year.
The above increase in revenue has been achieved, together with improved
percentage margins. Margins were negatively impacted in the prior year by
deflation, which resulted in Cashbuild maintaining lower selling prices on stock
purchased at pre-deflationary levels and a shift in product mix. This product
mix has now settled at year-end levels, whilst inflation has returned in this
quarter, to a level of 5%. Margin percentages have been further positively
impacted by stricter management of obsolete and slow moving stock, through more
intense focus on product ranging and finally, tighter control and management of
voluntary mark-downs. The above improvements have been achieved whilst ensuring
customers` requirements are met at all times which is evidenced by the increases
in revenue, number of transactions and units sold.
Stabilisation of the Botswana Pula exchange rate and the focus by management on
improving internal operational efficiencies is bearing fruit in Botswana, with
the result that the Botswanan operation is showing a strong improvement on the
comparative period.
Cashbuild`s balance sheet remains strong with working capital well under
control. Management has increased stock holding levels in all stores to meet the
growing demand and to ensure a continuous supply of goods in line with its
`always in stock` policy.
Cashbuild has opened two new stores in this quarter, with an additional two
stores to be completed before December. One store was relocated in this quarter
and four stores are currently being refurbished.
The new information technology system `went live` at support office on 27
September 2004. The new system is in the process of being bedded down. The roll
out of the new system to stores will start early 2005.
Prospects
Revenue growth in the month of October has continued to remain strong and there
is every indication that the Christmas trading period will be a good one.
The results for the first half of the financial year are materially affected by
the Christmas trading period and therefore management provides no indication at
this time of headline earnings expectations.
Cautionary announcement
Cashbuild is currently involved in discussions which may result in the
introduction of its employee base as a black economic empowerment partner having
a stake of up to 10% of the issued share capital in Cashbuild. Shareholders are
accordingly advised to exercise caution when dealing in their securities until a
further announcement has been made in this regard.
Johannesburg
03 November 2004
Investment bank and Sponsor
Nedbank Capital
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