CASHBUILD LIMITED - CASHBUILD 2ND QUARTER OPERATIONAL UPDATE
Cashbuild Limited
(Incorporated in the Republic of South Africa)
(Registration number 1986/001503/06)
Share code: CSB ISIN: ZAE000028320
(`Cashbuild` or `the company`)
CASHBUILD 2ND QUARTER OPERATIONAL UPDATE
Cashbuild is currently finalising its results for the half-year ended 31
December 2004. In line with past disclosure, Cashbuild herewith provides its
quarterly trading update.
Cashbuild`s robust growth has continued into the second quarter with a 33%
increase in revenue on the same period last year. Particularly encouraging to
management, is a healthy 23% improvement in the performance of comparable
stores. This, together with the 20% improvement in the first quarter has
resulted in a 27% overall increase in revenue for the first half of the
financial year.
With inflation at 7%, driven mainly by Safcol price increases in timber and
Ispat Iscor related steel price increases this improvement in revenue has been
achieved from real growth as illustrated by a 25% increase in transactions
through our tills for the second quarter (first quarter - 22%) and a 37%
increase in units of products sold (first quarter - 26%).
These improvements have been achieved largely as a result of the continued
positive macro-economic environment, consumer confidence and the strong property
culture permeating throughout southern Africa. Cashbuild`s focus on its core
strategies of `always in stock`, `lowest everyday prices`, our free delivery
service, as well as our highly successful campaign based on `life offers no
guarantees, but Cashbuild does`, have had a positive impact on Cashbuild`s
revenue.
The above increase in revenue has been achieved together with improved
percentage margins. Deflation had a negative impact on margins during the prior
year, which resulted in Cashbuild maintaining lower selling prices on stock
purchased at pre-deflationary levels, and a shift in product mix. It is
apparent, from the exceptional increase in units sold, the change in mix
continues to play a role in Cashbuild` success, as high volume / low margin
items continue to drive revenues higher. This change in mix is however, more
than compensated for by the increase off the deflationary resultant low base of
the prior year.
Overheads show a substantial increase on the prior period owing to costs
associated with the employment and development of our people to support our
planned future growth, the advertising campaign and free delivery service
mentioned above. This together with management`s anticipated increase in the
costs involved in the implementation of a new IT system have contributed to the
increase in overheads.
Cashbuild`s expansion plans continue in a controlled manner with four new stores
opened in the first half of this financial year, an additional one store
relocated, one store refurbished and five stores currently in the process of
refurbishment.
The new IT system `went live` on 27 September 2004 and is in the process of
being bedded down.
Prospects
Revenue growth in the first two weeks of January 2005 continues the trend shown
in the second quarter and we have every expectation that these growth levels,
barring any unforeseen circumstances or significant macro-economic events,
should continue into the second half of this financial year.
Johannesburg
12 January 2005
Sponsor
Nedbank Capital
Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information.
