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Cashbuild Limited - Cashbuild 1st Quarter Operational Update
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
In line with past practice and disclosure, Cashbuild herewith provides its
quarterly trading update.
Revenue for the first quarter of the 2006 financial year has seen the positive
trend experienced during the 4th quarter of 2005 continue, with an increase of
43% compared to the same quarter of last year.
Stores in existence since the beginning of July 2004 (pre-existing stores)
contributed 33% of the increase, whilst stores that were opened since the end of
the 2004 financial year (new stores), added 10%. Transactions through the tills
increased by 32% and the number of units sold for the quarter increased by 38%
in comparison to the prior period.
The increase in sales are still as a result of Cashbuild"s initiatives to grow
the top line. These initiatives were only put in place after the first quarter
of the 2005 financial year. The continued macro economic environment, consumer
confidence and the strong property culture throughout southern Africa also
impacted favourably on the revenue growth.
Gross margins for the quarter were under slight pressure mainly due to mix
changes as well as one specific incident relating to shrinkage that was
experienced during the quarter. Management has acted to address this issue and
to prevent similar reoccurrences.
During the prior year, Cashbuild embarked on a strategy to invest in the
business in order to step up and support the future growth of the company. This
strategy has resulted in operational costs for the quarter increasing in the
region of 38% (compared to the same quarter last year). The business improvement
strategy and related costs were in the following categories:
Pre-opening and launch cost relating to 5 additional stores (compared to 2 last
year)
The free local customer delivery service (currently at budgeted levels)
The intense and comprehensive advertising campaign relating to the "On Site"
reality TV program (non-recurring)
People investment
Additional people employed and extra shifts worked in the creditors department
to cope with volumes and to ensure that suppliers are paid timeously
Extra staffing to service customers during our extended trading hours
Additional internal security and field auditors
A 15% salary increase for the majority of non-managerial employees at store
level resulting from the implementation of Cashbuild"s formal grading system
(equating to a total company increase of 9%).
Executive decision to bring in technical and professional support to remedy
issues in the implementation of the new IT system (for the period of the Support
Office implementation).
Cashbuild has opened 4 new stores, refurbished 1 and relocated 1 store during
this quarter, confirming that the expansion plan is well on track.
IT
The corrective action plan put in place by management to address the problems
experienced with the new IT system at support office is progressing according to
plan.
Prospects
Turnover growth during October remains at good levels and expectations for the
Christmas trading period are positive.
As the Christmas trading period materially affects the results for the first
half of the financial year no earnings expectations are provided at this stage.
Johannesburg
1 November 2005
Sponsor
Nedbank Capital
Date: 01/11/2005 02:53:06 PM Produced by the JSE SENS Department
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