| Wed 13 Apr 2005, 17:08 | | Interim profit statement |
|
Ellerine Holdings Limited
(Registration number: 1968/013402/06)
Share code: ELH
ISIN number: ZAE000022752
Interim Profit Statement
For The Six Months Ended 28 February 2005
Turnover up 17,4%
Operating profit up 26,1%
Operating margin at 18,2%
Attributable profit up 62,3%
Headline earnings per share up 27,8%
Net gearing down to 15,3%
Acquisition of Relyant unconditionally approved
Consolidated income statements
12 months
6 months to February to August
2005 2004 2004
R'000 R'000 % R'000
Unaudited Unaudited Change Audited
Sale of merchandise
and finished goods 1 121 141 905 589 23,8 1 746 073
Finance charges earned 234 799 240 739 (2,5) 474 757
Financial services
earned 283 168 251 743 12,5 527 583
Rendering of services 54 159 44 249 22,4 84 499
Turnover 1 693 267 1 442 320 17,4 2 832 903
Cost of sales 765 075 641 483 19,3 1 219 304
Gross profit 928 192 800 837 15,9 1 613 599
Operating expenses 518 190 432 030 19,9 963 722
Debtors costs 101 189 123 942 (18,4) 138 497
Operating profit 308 813 244 865 26,1 511 380
Net financing costs (5 916) (7 002) (15,5) (17 191)
Fair value adjustments and
profit on disposal of
properties 46 727 786 9 466
Impairment/amortisation
of goodwill (7 885) (9 298) (23 767)
Income from associate 4 442 2 463 4 426
Profit before taxation 346 181 231 814 49,3 484 314
Taxation (89 881) (73 876) 21,7 (155 264)
Profit attributable to
ordinary shareholders 256 300 157 938 62,3 329 050
Determination of
headline earnings
Profit attributable to
ordinary shareholders 256 300 157 938 329 050
Impairment/amortisation
of goodwill 7 9 298 23 767
Fair value adjustments
and profit on disposal
of properties (46 727) (786) (9 466)
Net profit on disposal
of assets (2 908) (2 500) (5 356)
Tax effect thereon 2 238 750 2 670
Headline earnings 216 788 164 700 31,6 340 665
Number of ordinary
shares:
Weighted average 75 506 998 73 311 327 73 953 151
In issue 78 404 200 76 198 299 77 313 815
Treasury (2 897 202) (2 886 972) (3 360 664)
Fully diluted weighted
average 78 030 089 75 594 452 76 420 393
Earnings per share: Cents Cents Cents
Attributable 339,4 215,4 57,6 444,9
Headline 287,1 224,7 27,8 460,6
Fully diluted
attributable 328,5 208,9 57,2 430,6
Fully diluted headline 277,8 217,9 27,5 445,8
% % %
GP 54,8 55,5 57,0
Operating margin 18,2 17,0 18,1
Tax rate 24,7 30,8 31,2
Consolidated balance sheet
February February August
2005 2004 2004
R'000 R'000 R'000
Unaudited Unaudited Audited
ASSETS
Non-current assets 1 047 246 948 315 946 280
Property and equipment 232 446 258 309 261 494
Goodwill 266 083 269 635 264 736
Investment in associate 31 089 26 025 27 988
Investments at bankers 432 628 304 184 307 062
Other financial assets 85 000 90 162 85 000
Current assets 2 494 778 2 089 358 2 199 645
Inventories 290 307 227 596 246 562
Trade receivables 2 928 043 2 562 981 2 576 821
Provisions (942 646) (866 555) (853 370)
1 985 397 1 696 426 1 723 451
Term loans 65 830 64 099 61 665
Provisions (35 960) (34 337) (34 232)
29 870 29 762 27 433
Other receivables 112 062 32 530 61 080
Funds at call, bank balances
and cash 77 142 103 044 141 119
TOTAL ASSETS 3 542 024 3 037 673 3 145 925
EQUITY AND LIABILITIES
Shareholders' equity and
reserves 2 110 187 1 739 311 1 916 373
Non-current liabilities 477 475 463 447 468 040
Deferred taxation 223 486 204 290 212 244
Interest bearing borrowings 253 989 259 167 255 796
Current liabilities 954 362 834 915 761 512
Taxation 37 540 24 420 16 726
Provisions 33 312 38 251 49 160
Trade and other payables 220 052 160 247 190 513
Bank overdrafts 663 458 611 997 505 113
TOTAL EQUITY AND LIABILITITES 3 542 024 3 037 673 3 145 925
Net asset value
per share - cents 2 769 2 328 2 557
Current ratio 2,6 2,5 2,9
Net interest bearing debt:
Equity (%) 15,3 21,5 11,9
Consolidated cash flow statement
February February August
2005 2004 2004
R'000 R'000 R'000
Unaudited Unaudited Audited
Cash generated from operating
activities 399 199 327 874 620 378
Working capital changes (338 613) (196 607) (232 670)
Cash generated from operations 60 586 131 267 387 708
Exchange rate difference on
translation of foreign entities (968) (13 254) (12 235)
Net financing costs (5 916) (7 002) (17 191)
Taxation paid (57 826) (100 226) (183 469)
Dividends paid (78 619) (62 479) (62 486)
Cash flows from operating
activities (82 743) (51 694) 112 327
Proceeds on disposal of
preference shares - - 5 162
Acquisition of Wetherlys - (511 694) (521 684)
Purchase of property and
equipment (36 939) (34 302) (67 558)
Proceeds on disposal of
property and equipment 6 251 5 581 25 135
Cash flows from investing
activities (30 688) (540 415) (558 945)
Disposal/(Acquisition) of
treasury shares 16 374 (12 235) (7 304)
Proceeds from the issue of
new shares 2 107 94 438 94 438
(Decrease)/Increase in interest
bearing borrowings (1 807) 152 961 148 544
Cash flows from financing
activities 16 674 235 164 235 678
Net/decrease increase in cash
and cash equivalents (96 757) (356 945) (210 940)
Cash and cash equivalents on
acquisition of Wetherlys
Investment Holdings Limited - 48 723 50 555
Cash and cash equivalents at
the beginning of the year (56 931) 103 454 103 454
Cash and cash equivalents at
the end of the year (153 688) (204 768) (56 931)
Attributable cash flow
per share (cents) (5,5) 14,7 236,4
Statement of changes in equity
Insurance Non-
con- distri-
Share Share tingency butable
R'000 capital premium reserve reserves
Balance at
31 August 2003 3 541 40 586 30 686 26 252
Exchange rate
difference arising
on translation
of foreign entities (12 235)
Issue of new shares 230 94 208
Treasury shares
purchased and held (23)
Net profit for the year
Transfer to insurance
contingency reserve 5 754
Transfer of realised
profits on disposal
of owner occupied
properties to
non-distributable
reserves 10 983
Transfer of revaluation
of investment
properties to
non-distributable
reserves 2 263 (2 263)
Dividend paid
- Total
Treasury shares
Balance at
31 August 2004 3 748 134 794 36 440 27 263
Exchange rate
difference arising
on translation
of foreign entities (968)
Issue of new shares 8 2 099
Treasury shares
purchased and held 54
Net profit for the period
Transfer to insurance
contingency reserve 3 768
Transfer of realised
profits on disposal
of owner occupied
properties to NDR 46 727
Dividend paid
-Total
Treasury shares
Balance at
28 February 2005 3 810 136 893 40 208 73 022
Statement of changes in equity (continued)
Distri- At At
butable February February
R'000's reserves 2005 2004
Balance at
31 August 2003 1 473 908 1 574 973 1 450 779
Exchange rate
difference arising
on translation
of foreign entities (12 235) (17 161)
Issue of new shares 94 438 -
Treasury shares
purchased and held (7 281) (7 304) (52 789)
Net profit for the year 329 050 329 050 247 230
Transfer to insurance
contingency reserve (5 754) - -
Transfer of realised
profits on disposal
of owner occupied
properties to
non-distributable
reserves (10 983) - -
Transfer of revaluation
of investment
properties to
non-distributable
reserves (2 263) - -
Dividend paid (62 549) (62 549) (53 086)
- Total (64 409) (64 409) (53 878)
Treasury shares 1 860 1 860 792
Balance at
31 August 2004 1 714 128 1 916 373 1 574 973
Exchange rate
difference arising
on translation
of foreign entities (968) (13 254)
Issue of new shares 2 107 94 438
Treasury shares
purchased and held 16 320 16 374 (12 235)
Net profit for the period 256 300 256 300 157 938
Transfer to insurance
contingency reserve (3 768) - -
Transfer of realised
profits on disposal
of owner occupied
properties to NDR (46 727) - -
Dividend paid (79 999) (79 999) (62 549)
-Total (82 324) (82 324) (64 409)
Treasury shares 2 325 2 325 1 860
Balance at
28 February 2005 1 856 254 2 110 187 1 739 311
Business Unit segmental analysis February 2005
Total
Ellerines Towntalk FurnCity Foreign Credit
R'000 R'000 R'000 R'000 R'000
Income statement
Turnover
2005 481 346 289 241 254 178 156 268 1 181 033
2004 417 640 249 881 211 444 151 890 1 030 855
% vs last year 15,3 15,8 20,2 2,9 14,6
Credit sales
2005 444 523 268 792 224 032 136 719 1 074 066
2004 385 941 234 288 186 833 136 002 943 064
% vs last year 15,2 14,7 19,9 0,5 13,9
Cash sales
2005 36 823 20 449 30 146 19 549 106 967
2004 31 699 15 593 24 611 15 888 87 791
% vs last year 16,2 31,1 22,5 23,0 21,8
Cash sales %
2005 7,7 7,1 11,9 12,5 9,1
2004 7,6 6,2 11,6 10,5 8,5
% vs last year 0,1 0,8 0,2 2,0 0,5
Merchandise sales
2005 362 362 217 614 199 210 112 889 892 075
2004 300 794 178 694 159 267 107 112 745 867
% vs last year 20,5 21,8 25,1 5,4 19,6
Operating profit
2005 144 775 83 474 58 666 27 155 314 070
2004 81 280 49 367 29 176 26 639 186 462
% vs last year 78,1 69,1 101,1 1,9 68,4
Operating margin %
2005 30,1 28,9 23,1 17,4 26,6
2004 19,5 19,8 13,8 17,5 18,1
% vs last year 10,6 9,1 9,3 (0,2) 8,5
Depreciation
2005 6 544 3 338 4 915 3 314 18 111
2004 4 980 2 574 3 637 3 126 14 317
% vs last year 31,4 29,7 35,1 6,0 26,5
Balance sheet
Assets
2005 941 270 559 875 475 022 330 511 2 306 678
2004 787 392 476 696 391 062 309 214 1 964 364
% vs last year 19,5 17,4 21,5 6,9 17,4
Liabilities
2005 (66 177) (33 134) (27 710) (53 606) (180 627)
2004 (53 353) (30 345) (25 359) (58 277) (167 334)
% vs last year 24,0 9,2 9,3 (8,0) 7,9
Net assets
2005 875 093 526 741 447 312 276 905 2 126 051
2004 734 039 446 351 365 703 250 937 1 797 030
% vs last year 19,2 18,0 22,3 10,3 18,3
Cost to acquire assets
2005 9 485 2 860 6 830 4 527 23 702
2004 5 025 2 544 5 281 2 103 14 953
% vs last year 88,8 12,4 29,3 115,3 58,5
Resources
Number of stores
2005 259 139 127 77 602
2004 245 139 116 78 578
% vs last year 5,7 0,0 9,5 (1,3) 4,2
Number of employees
2005 3 173 1 934 1 670 1 065 7 842
2004 3 018 1 875 1 543 1 007 7 443
% vs last year 5,1 3,1 8,2 5,8 5,4
Retail m2
2005 158 022 88 632 84 880 48 471 380 005
2004 156 681 89 473 80 073 49 656 375 883
% vs last year 0,9 (0,9) 6,0 (2,4) 1,1
Productivity ratios
Merchandise sales:turnover %
2005 75,3 75,2 78,4 72,2 75,5
2004 72,0 71,5 75,3 70,5 72,4
% vs last year 3,3 3,7 3,1 1,7 3,2
Turnover per store
2005 1 858 2 081 2 001 2 029 1 962
2004 1 705 1 798 1 823 1 947 1 783
% vs last year 9,0 15,8 9,8 4,2 10,0
Turnover per employee
2005 151 701 149 556 152 202 146 731 150 604
2004 138 383 133 270 137 034 150 834 138 500
% vs last year 9,6 12,2 11,1 (2,7) 8,7
Operating profit per employee
2005 45 627 43 161 35 129 25 498 40 050
2004 26 932 26 329 18 909 26 454 25 052
% vs last year 69,4 63,9 85,8 (3,6) 59,9
Turnover per m2
2005 3 046 3 263 2 995 3 224 3 108
2004 2 666 2 793 2 641 3 059 2 742
% vs last year 14,3 16,8 13,4 5,4 13,3
m2 per outlet
2005 610 638 668 629 631
2004 640 644 690 637 650
% vs last year (4,6) (0,9) (3,2) (1,1) (2,9)
Trade receivables
Gross receivables
2005 1 217 668 734 465 581 941 375 506 2 909 580
2004 1 069 543 645 704 489 202 347 335 2 551 784
% vs last year 13,8 13,7 19,0 8,1 14,0
Debtors costs
2005 40 597 25 277 21 572 8 558 96 004
2004 53 695 33 558 28 189 7 926 123 368
% vs last year (24,4) (24,7) (23,5) 8,0 (22,2)
Debtors cost %
2005 3,3 3,4 3,7 2,3 3,3
2004 5,0 5,2 5,8 2,3 4,8
% vs last year (1,7) (1,8) (2,1) 0,0 (1,5)
Average length of book in months
2005 14,8 14,7 14,0 15,8 14,7
2004 14,9 14,9 14,1 14,7 14,7
% vs last year (0,1) (0,2) (0,1) 1,1 0,0
Arrears - net
2005 224 507 133 883 97 483 74 089 529 962
2004 277 974 155 191 114 058 77 047 624 270
% vs last year (19,2) (13,7) (14,5) (3,8) (15,1)
Arrears %
2005 18,4 18,2 16,8 19,7 18,2
2004 26,0 24,0 23,3 22,2 24,5
% vs last year (7,6) (5,8) (6,6) (2,5) (6,2)
Collection rate %
2005 6,0 6,0 6,1 5,9 6,0
2004 5,4 5,5 5,8 5,8 5,7
% vs last year 0,6 0,5 0,3 0,1 0,3
Deposit rate %
2005 16,4 15,9 21,2 21,1 17,9
2004 16,0 14,2 21,0 19,5 17,1
% vs last year 0,4 1,7 0,2 1,6 0,8
Business Unit segmental analysis February 2005 (continued)
Total
Wetherlys Osiers Spain Cash
R'000 R'000 R'000 R'000
Income statement
Turnover
2005 169 787 54 094 4 759 228 640
2004 120 631 35 179 3 442 159 252
% vs last year 40,7 53,8 38,3 43,6
Credit sales
2005
2004
% vs last year
Cash sales
2005 169 787 54 094 4 759 228 640
2004 120 631 35 179 3 442 159 252
% vs last year 40,7 53,8 38,3 43,6
Cash sales %
2005 100 100 100 100
2004 100 100 100 100
% vs last year
Merchandise sales
2005 169 787 54 094 4 759 228 640
2004 120 631 35 179 3 442 159 252
% vs last year 40,7 53,8 38,3 43,6
Operating profit
2005 17 615 6 269 (3 334) 20 550
2004 19 347 6 995 117 26 459
% vs last year (9,0) (10,4) (22,3)
Operating margin %
2005 10,4 11,6 (70,1)
2004 16,0 19,9 3,4 16,6
% vs last year 10,4 11,6 (70,1) 9,0
Depreciation
2005 2 158 566 171 2 895
2004 987 292 2 1 281
% vs last year 118,6 93,8 126,0
Balance sheet
Assets
2005 128 163 48 214 15 197 191 574
2004 112 262 43 162 6 811 162 235
% vs last year 14,2 11,7 123,1 18,1
Liabilities
2005 (30 138) (20 530) (19 654) (70 322)
2004 (15 020) (16 382) (3 093) (34 495)
% vs last year 100,7 25,3 535,4 103,9
Net assets
2005 98 025 27 684 (4 457) 121 252
2004 97 242 26 780 3 718 127 740
% vs last year 0,8 3,4 (219,9) (5,1)
Cost to acquire assets
2005 1 385 1 073 315 2 773
2004 1 483 452 1 935
% vs last year (6,6) 137,4 43,3
Resources
Number of stores
2005 12 10 2 24
2004 11 6 1 18
% vs last year 9,1 66,7 100,0 33,3
Number of employees
2005 579 279 25 883
2004 539 247 15 801
% vs last year 7,4 13,0 66,7 10,2
Retail m2
2005 34 100 11 800 1 800 47 700
2004 32 100 9 000 900 42 000
% vs last year 6,2 31,1 100,0 13,6
Productivity ratios
Merchandise sales: turnover %
2005
2004
% vs last year
Turnover per store
2005 14 149 5 409 2 380 9 527
2004 10 966 5 863 3 442 8 847
% vs last year 29,0 (7,7) (30,9) 7,7
Turnover per employee
2005 293 242 193 885 190 360 258 935
2004 223 805 142 425 229 467 198 816
% vs last year 31,0 36,1 (17,0) 30,2
Operating profit per employee
2005 30 423 22 470 (133 360) 23 273
2004 35 894 28 320 7 800 33 032
% vs last year (15,2) (20,7) (1809,7) (29,5)
Turnover per m2
2005 4 979 4 584 2 644 4 793
2004 3 758 3 909 3 824 3 792
% vs last year 32,5 17,3 (30,9) 26,4
m2 per outlet
2005 2 842 1 180 900 1 988
2004 2 918 1 500 900 2 333
% vs last year (2,6) (21,3) 0,0 (14,8)
Trade receivables
Gross receivables
2005 18 463 18 463
2004 10 687 10 687
% vs last year 72,8 72,8
Debtors costs
2005 930 930
2004 - -
% vs last year
Debtors cost %
2005 5,0 5,0
2004 0,0 0,0
% vs last year 5,0 5,0
Average length of book in months
2005
2004
% vs last year
Arrears - net
2005
2004
% vs last year
Arrears %
2005
2004
% vs last year
Collection rate %
2005
2004
% vs last year
Deposit rate %
2005
2004
% vs last year
Business Unit segmental analysis February 2005 (continued)
Manufac- Fin Pro- Corpo- Total
turing perties Services rate Group
R'000 R'000 R'000 R'000 R'000
Income statement
Turnover
2005 426 283 168 1 693 267
2004 470 251 743 1 442 320
% vs last
year (9,4) 12,5 17,4
Credit sales
2005 283 168 1 357 234
2004 251 743 1 194 807
% vs last
year 12,5 13,6
Cash sales
2005 426 336 033
2004 470 247 513
% vs last
year (9,4) 35,8
Cash sales %
2005 100 19,8
2004 100 17,2
% vs last
year 2,7
Merchandise sales
2005 426 1 121 141
2004 470 905 589
% vs last
year (9,4) 23,8
Operating profit
2005 171 6 729 34 888 (67 595) 308 813
2004 1 492 7 433 77 629 (54 610) 244 865
% vs last
year (88,5) (9,5) (55,1) 23,8 26,1
Operating margin %
2005 12,3 18,2
2004 30,8 17,0
% vs last
year (18,5) 1,3
Depreciation
2005 1 129 120 481 4 931 27 667
2004 502 494 426 2 927 19 947
% vs last
year 124,9 (75,7) 12,9 68,5 38,7
Balance sheet
Assets
2005 12 586 104 734 594 929 331 523 3 542 024
2004 8 267 157 951 499 448 245 408 3 037 673
% vs last
year 52,2 (33,7) 19,1 35,1 16,6
Liabilities
2005 (5 566) (30 050) (40 242) (1 105 029) (1 431 836)
2004 (1 108) (20 001) (25 753) (1 049 671) (1 298 362)
% vs last
year 402,3 50,2 56,3 5,3 10,3
Net assets
2005 7 020 74 684 554 687 (773 506) 2 110 188
2004 7 159 137 950 473 695 (804 263) 1 739 311
% vs last
year (1,9) (45,9) 17,1 (3,8) 21,3
Cost to acquire assets
2005 3 323 682 6 458 36 938
2004 (9) 2 415 129 14 879 34 302
% vs last year (100,0) 428,7 (56,6) 7,7
Resources
Number of stores
2005 54 680
2004 48 644
% vs last
year 12,5 5,6
Number of employees
2005 217 174 242 9 358
2004 166 165 241 8 816
% vs last
year 30,7 5,5 0,4 6,1
Retail m2
2005 3 283 430 988
2004 3 132 421 015
% vs last
year 4,8 2,4
Productivity ratios
Merchandise sales: turnover %
2005 66,2
2004 62,8
% vs last year 3,4
Turnover per store
2005 5 244 2 490
2004 5 245 2 240
% vs last year 0,0 11,2
Turnover per employee
2005 1 963 180 943
2004 2 831 163 603
% vs last
year (30,7) 10,6
Operating profit per employee
2005 788 33 000
2004 8 988 27 775
% vs last
year (91,2) 18,8
Turnover per m2
2005 86 253 3 929
2004 80 378 3 426
% vs last year 7,3 14,7
m2 per outlet
2005 61 634
2004 65 654
% vs last year (6,8) (3,1)
Trade receivables
Gross receivables
2005 65 830 2 993 873
2004 64 099 510 2 627 080
% vs last year 2,7 14,0
Debtors costs
2005 4 255 101 189
2004 574 123 942
% vs last year 641,3 (18,4)
Debtors cost %
2005 6,5 3,4
2004 0,9 4,7
% vs last year 5,6 (1,3)
Average length of book in months
2005
2004
% vs last year
Arrears - net
2005
2004
% vs last year
Arrears %
2005
2004
% vs last year
Collection rate %
2005
2004
% vs last year
Deposit rate %
2005
2004
% vs last year
Geographical segmental analysis February 2005
RSA Foreign Total
R'000 R'000 R'000
Income statement
Turnover
2005 1 513 471 179 796 1 693 267
2004 1 261 376 180 944 1 442 320
% vs last year 20,0 (0,6) 17,4
Credit sales
2005 1 203 191 154 043 1 357 234
2004 1 034 497 160 310 1 194 807
% vs last year 16,3 (3,9) 13,6
Cash sales
2005 310 280 25 753 336 033
2004 226 879 20 634 247 513
% vs last year 36,8 24,8 35,8
Cash sales %
2005 20,5 14,3 19,8
2004 18,0 11,4 17,2
% vs last year 2,5 2,9 2,7
Merchandise sales
2005 988 030 133 111 1 121 141
2004 781 652 123 937 905 589
% vs last year 26,4 7,4 23,8
Operating profit
2005 277 611 31 202 308 813
2004 213 058 31 807 244 865
% vs last year 30,3 (1,9) 26,1
Operating margin %
2005 18,3 17,4 18,2
2004 16,9 17,6 17,0
% vs last year 1,5 (0,2) 1,3
Depreciation
2005 23 816 3 851 27 667
2004 16 611 3 336 19 947
% vs last year 43,4 15,4 38,7
Balance sheet
Assets
2005 3 159 884 382 140 3 542 024
2004 2 696 622 341 051 3 037 673
% vs last year 17,2 12,0 16,6
Liabilities
2005 (1 353 367) (78 469) (1 431 836)
2004 (1 237 647) (60 715) (1 298 362)
% vs last year 9,4 29,2 10,3
Net assets
2005 1 806 517 303 671 2 110 188
2004 1 458 975 280 336 1 739 311
% vs last year 23,8 8,3 21,3
Cost to acquire assets
2005 31 340 5 598 36 938
2004 32 083 2 219 34 302
% vs last year (2,3) 152,3 7,7
Resources
Number of stores
2005 592 88 680
2004 556 88 644
% vs last year 6,5 0,0 5,6
Number of employees
2005 8 149 1 209 9 358
2004 7 676 1 140 8 816
% vs last year 6,2 6,1 6,1
Retail m2
2005 360 717 70 271 430 988
2004 350 459 70 556 421 015
% vs last year 2,9 (0,4) 2,4
Productivity ratios
Merchandise sales: turnover %
2005 65,3 74,0 66,2
2004 62,0 68,5 62,8
% vs last year 3,3 5,5 3,4
Turnover per store
2005 2 557 2 043 2 490
2004 2 269 2 056 2 240
% vs last year 12,7 (0,6) 11,2
Turnover per employee
2005 185 725 148 715 180 943
2004 164 327 158 723 163 603
% vs last year 13,0 (6,3) 10,6
Operating profit
2005 34 067 25 808 33 000
per employee
2004 27 756 27 901 27 775
% vs last year 22,7 (7,5) 18,8
Turnover per m2
2005 4 196 2 559 3 929
2004 3 599 2 565 3 426
% vs last year 16,6 (0,2) 14,7
m2 per outlet
2005 609 799 634
2004 630 802 654
% vs last year (3,3) (0,4) (3,1)
Trade receivables
Gross receivables
2005 2 576 528 417 345 2 993 873
2004 2 238 478 388 602 2 627 080
% vs last year 15,1 7,4 14,0
Debtors costs
2005 89 988 11 201 101 189
2004 113 868 10 074 123 942
% vs last year (21,0) 11,2 (18,4)
Debtors cost %
2005 3,5 2,7 3,4
2004 5,1 2,6 4,7
% vs last year (1,6) 0,1 (1,3)
Average length of book in months
2005 9,2 13,4 12,0
2004 9,6 12,4 12,0
% vs last year (0,4) 1,0 0,0
Arrears - net
2005 455 873 74 089 529 962
2004 547 223 77 047 624 270
% vs last year (16,7) (3,8) (15,1)
Arrears %
2005 17,7 17,8 17,7
2004 24,4 19,8 23,8
% vs last year (6,8) (2,1) (6,1)
Collection rate %
2005 6,0 5,9 6,0
2004 5,6 5,8 5,7
% vs last year 0,5 0,1 0,3
Deposit rate %
2005 17,8 21,1 17,9
2004 17,1 19,5 17,1
% vs last year 0,7 1,6 0,8
COMMENTS
Trading environment
The buoyant trading conditions which prevailed during the 2004 financial year
continued for the period under review. Disposable income of consumers reached an
all time high due to the continued low interest rate environment, reduced tax
rates, particularly for lower income earners, as well as the benefits of the
stronger Rand which has resulted in low inflation and reduced price points for
imported appliances and audio equipment.
The Group was able to take full advantage of the favourable macro economic
conditions and the strong consumer demand in the retail sector, particularly for
durable goods.
Financial Review
Group turnover increased by 17,4% to R1,7 billion which included the Wetherlys
sales for the full six months (2004: 4 months). This increase was achieved
despite the lower finance charge rates raised on instalment sales in the credit
retail division.
Merchandise sales for the Group increased by 23,8% with the credit retail
division recording an increase of 19,6% which is most pleasing given the
deflationary effects on imported products and the highly competitive market in
which the Group operates. The overall inflationary increase of goods sold by the
Group was 2% during the period.
The operating margin at 18,2% (2004: 17,0%), is the highest recorded for a
number of years. This is primarily due to the 18,4% reduction in debtors costs
in the credit retail division as evidenced by the improvement in debtors
arrears, collection rates and the quality of the credit granted over the past 24
months.
Headline earnings per share at 287,1 cents represents an increase of 27,8% over
the previous year and reflects the improved trading efficiencies of the Group.
The balance sheet remains strong with net gearing at 15,3% (2004: 21,5%) despite
having come through the highest trading volume period in the history of the
Group.
As stated in the Annual Report at August 2004 certain non-strategic investment
and owner occupied properties were sold to Prima Property Trust for R82 million.
At 28 February 2005 the transfer of the properties had not yet been completed
and the R82 million is included in Other Debtors. During the period November
2004 to date of transfer (March 2005) interest was charged to Prima Property
Trust on the outstanding balance. The transaction resulted in a capital profit
of R46,7 million. Subsequent to February 2005 R60 million has been received in
cash and payment of the remaining R22 million has been discharged by the
delivery of 24.4 million Prima Property Trust units at 90 cents per unit, which
are currently held as an investment.
The quality of the gross trade receivables at R2,9 billion showed a significant
improvement over the prior year. Total provisions against the debtors book
amount to R943 million being 32,2% (2004: 33,8%) of gross debtors.
Inventories at R290 million are 27,6% up on the previous period due to the high
turnovers achieved and the relaxation of inventory stock holding levels on
certain lines so as to enable the Group to take full advantage of the buoyant
trading conditions. A number of new outlets in both the credit and cash retail
divisions were also opened during the period.
The net asset value per share at 2 769 cents increased by 18,9% over the
previous period and results in a ratio of market price to net asset value of 2,0
times, a significant improvement over the past number of years.
The increase in the trading activity of the Group has had the impact of
absorbing cash flows from operating activities in order to fund working capital
requirements. Despite this, net borrowings at R323 million (2004: R374 million)
reduced by R51 million compared with the previous period.
Divisional Operational Review
Credit Retail
Total turnover for the division at R1,18 billion (2004: R1,03 billion) is 14,5%
up on the previous period and constitutes 69,7% of Group turnover. This division
trades out of 602 outlets (2004: 578).
The RSA credit retail chains performed particularly well when compared to the
previous period with turnover at R1,03 billion, up 16,6% and merchandise sales
at R779 million, up 21,9%. The volumes recorded were above expectations and
ahead of the industry mean, with turnover per store increasing on average by
11,0%.
Turnover for the foreign operations increased by only 3% to R156 million. With
the exception of Lesotho, where performance was in line with expectations,
Namibia, Botswana and particularly Zambia continue to trade below the level of
the RSA stores. Margins and profitability in the Foreign Business Unit are below
Group objectives. A number of senior management changes have been effected in
the foreign division and improvements are anticipated.
The operating margin for the credit retail division at 26,6% (2004: 18,1%)
reflects a significant improvement which is the result of the increased volumes
and the maintenance of trading margins.
The gross trade receivables at R2,9 billion (2004: R2,6 billion) have increased
by 14,2%, in line with the increase in turnover, while provisions at R943
million (2004: R867 million) only increased by 8,8%, which is indicative of the
improved management control and condition of the debtors ledger. Net arrears at
18,1% (2004: 24,3%) and collection rates at 6,0% (2004: 5,67%) have improved
significantly over the previous period, with doubtful debt provisions at R305
million maintained at year end August 2004 rand value levels.
Cash Retail
The Wetherlys trading results with turnover at R229 million (2004: R159
million), reflects an increase of 43,4%. It should, however, be noted that the
trading results were only included for four months to February 2004 and the
current period under review includes one additional Wetherlys and four new
Osiers outlets.
The turnovers were below expectations, particularly with regard to exports and
local purchases by foreign investors and tourists, due to the strengthening of
the Rand. Trading activity in the upper end of the market was not as buoyant as
for the middle to lower income groups.
With the introduction of an exciting new contemporary range in Wetherlys and
improved customer focused marketing initiatives, it is anticipated that trading
will further improve in the second half of the year.
The operating margin in the main trading business units of both Wetherlys and
Osiers at around 11% has been addressed and the target margin of around 16%
should be achievable over the next two trading quarters and sustained
thereafter.
Trading in Wetherlys Spain has been well below expectations resulting in the
full amount on the investment having now been impaired. The matter is currently
receiving the full attention of management.
The second furniture manufacturing operation was commissioned during the period
under review and has enhanced the manufacturing capabilities of the division
which will enable Wetherlys to become self-sufficient in regard to certain niche
products and will facilitate the supply of various base products to the greater
Group.
Mark Hartwig, who has been with the group for many years, has been appointed to
head up this division and a number of key changes have been made to the
executive team at Wetherlys. The Board is confident that the operational
efficiencies required of the division will be achieved under his leadership.
Financial Services
Both Customer Protection Insurance Company and Rainbow Loans performed in line
with expectations and collectively generated an increase in gross revenues of
19,4%. However, after allowing for unearned income of R72,6 million (2004: R46,2
million), the net turnover of R283 million (2004: R252 million) shows an
increase of 12,5%.
Rainbow Loans achieved an operating profit of R15,0 million (2004: R12,2
million), an increase of 23,0%, on an asset base of R45 million (2004: R39
million). The gross debtors ledger at R65 million (2004: R64 million) is well
provisioned at 54,6%, given the relatively high risk nature of the business. A
further 6 outlets were opened since February 2004, with Rainbow Loans currently
trading out of 54 outlets.
During the period under review the Group contracted to increase its shareholding
from 37,5% to 40,0% in CICL Investment Holdings, which owns the Constantia
Insurance group of companies, a provider of niche products in the insurance
industry. The performance from CICL is well above last year and the equity
accounted income from CICL was R4,4 million (2004: R2,5 million).
Accounting Policies
The interim financial statements have been prepared in accordance with South
African Statements of Generally Accepted Accounting Practice.
The accounting policies applied are consistent with those used in the annual
financial statements for the year ended 31 August 2004 except as follows:
Change in accounting policy
IFRS3 (AC 140) - Business Combinations
The adoption of the statement resulted in a change in accounting policy for
goodwill. For all business combinations on or after 31 March 2004 goodwill is
measured as the excess of the cost of acquisition "over the interest in the fair
value of the assets, liabilities and contingent liabilities acquired and
recognised".
Until 31 August 2004 goodwill was amortised on a straight line basis over its
useful life generally not exceeding 10 years.
With effect from 1 September 2004 and in accordance with the provisions of IFRS3
(AC 140):
the Group no longer amortises goodwill; and
goodwill will be measured annually for impairment in terms of IAS6 (AC 128:
impairment of assets), as well as when there are indications of impairment.
Relyant Merger
The Competition Tribunal unconditionally approved the merger of Ellerines and
Relyant on 30 March 2005. A circular has been posted to all Relyant shareholders
advising them of the terms of the offer. Shareholders representing 90,2% of the
issued share capital of Relyant have provided the Group with irrevocable
undertakings to support the transaction and are expected to tender their shares
in terms of the circular by not later than Thursday, 14 April 2005. It is
anticipated that the offer will be declared "unconditional" on or about Friday,
15 April 2005 after which the remaining shareholders will be asked to tender
their shares in exchange for shares in Ellerines. Whilst the process of
obtaining 100% of the issued shares in Relyant may only be completed towards the
end of June 2005, it is expected that management control will pass to the
Ellerines Executive with effect from mid April 2005.
The merged Group, with over 1 000 outlets, a customer base of almost 2 million,
and an annual turnover of R6 billion, will usher in a new era characterised by
enhanced confidence and the vision to secure a successful future for all
stakeholders. It will also facilitate the implementation of the "customer for
life" strategy. The Group will have the opportunity of targeting customers
across the entire furniture and appliance spectrum, from entry level through to
the upper end of the market.
The synergies and improved trading efficiencies which will result from the
merged Group are significant and will be extracted over the next two to three
years in an organised and systematic manner in order to derive the maximum
benefits for the Group with minimal disruption at the trading level.
Prospects
The buoyant trading conditions in the furniture retail market are expected to
continue for the remainder of the year to August 2005. Management expects the
improved trading performance of the Group to be sustained for the remainder of
the financial year.
Directors
Mr BD van der Merwe resigned from the Board with effect from 1 February 2005 but
remained on as a Non-Executive Divisional Director of Wetherlys.
Dividend
The Group's current policy is to declare one dividend per annum, payable after
the announcement of the year-end results.
By order of the Board
Denzil McGlashan Peter Squires
Chairman Chief Executive Officer
13 April 2005
Registered office: Gillooly's View Office Park, Block E, Osborne Lane,
Bedfordview 2008
Transfer secretaries: Computershare Investor Services 2004 (Pty) Ltd, 70
Marshall Street, Johannesburg PO Box 61051, Marshalltown, 2107
Auditors: Grant Thornton
Sponsors: Nedbank Capital.
Directors: DS McGlashan* (Chairman), PJC Squires (Chief Executive Officer), TJ
Chalmers*, J Dritz, PN Gumede*, RA Rawlings, PEI Swartz*, AR van den Borne, S
Zungu* (* Non-Executive directors)
website: www.ellerines.co.za
Date: 13/04/2005 04:37:48 PM Produced by the JSE SENS Department
