| Mon 7 Nov 2005, 15:13 | | RESULTS FOR THE YEAR ENDED 31 AUGUST 2005 |
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Ellerine Holdings Limited - Consolidated Audited Results For The Year Ended 31
August 2005
ELLERINE HOLDINGS LIMITED
(Registration number: 1968/013402/06)
Share code: ELH
ISIN number: ZAE000022752
CONSOLIDATED AUDITED RESULTS FOR THE YEAR ENDED 31 AUGUST 2005
- Turnover up 53%
- Attributable profit up 73%
- Headline earnings per share up 29%
- Dividend up 37%
- Relyant Retail acquired
- Integration on track
- Quality of debtors book improves
INCOME STATEMENT
Actual Actual
2005 2004 %
R"000 R"000 Change
Continuing operations
Turnover 4 315 805 2 823 468 52,9
Cost of sales 2 028 340 1 214 843
Gross profit 2 287 465 1 608 625 42,2
Operating expenses 1 393 587 960 686 45,1
Debtors costs 141 753 138 497 2,4
Operating profit 752 125 509 442 47,6
Net financing costs (14 694) (17 081)
Fair value adjustments and
profit on disposal of properties 53 917 9 466
Goodwill impairment (16 831) (23 767)
Income from associate 7 080 4 426
Profit before taxation 781 597 482 486 62,0
Taxation (204 110) (154 223) 32,3
Profit for the year from
continuing operations 577 487 328 263 75,9
Discontinued operations
Loss for the year from
discontinued operations (13 609) (1 672)
Profit attributable to ordinary
shareholders 563 878 326 591 72,7
Determination of headline
earnings
Profit attributable to ordinary
shareholders 563 878 326 591
Goodwill impairment 16 831 23 767
Fair value adjustments and
profit on disposal of properties (53 917) (9 466)
Net profit on disposal of
vehicles and equipment (8 216) (5 356)
Tax effect thereon 10 014 2 670
Headline earnings 528 590 338 206 56,3
Number of ordinary shares:
Weighted average 89 498 069 73 953 151
In issue 92 496 695 77 313 815
Treasury (2 998 626) (3 360 664)
Fully diluted weighted average 91 474 827 76 420 393
Continuing operations
Earnings per share: Cents Cents
Attributable 645,3 443,9 45,4
Headline 605,8 459,6 31,8
Fully diluted attributable 631,3 429,5 47,0
Fully diluted headline 592,7 444,7 33,3
Total
Earnings per share: Cents Cents
Attributable 630,0 441,6 42,7
Headline 590,6 457,3 29,1
Fully diluted attributable 616,4 427,4 44,2
Fully diluted headline 577,9 442,6 30,6
% %
GP 53,0 57,0
Operating margin 17,4 18,0
Tax rate 26,1 31,9
BALANCE SHEET
2005 2004
R"000 R"000
ASSETS
Non-current assets 2 432 236 946 280
Property and equipment 307 111 261 494
Goodwill 805 617 264 736
Trademarks 316 503 -
Investment in associate 35 644 27 988
Deferred tax 316 570 -
Investments at bankers 534 028 307 062
Other financial assets 116 763 85 000
Current assets 4 638 903 2 199 645
Inventories 582 636 246 562
Trade receivables 4 126 656 2 576 821
Provisions (1 141 538) (853 370)
2 985 118 1 723 451
Term loans 918 041 -
Provisions (237 205) -
680 836 -
Short-term loans 65 907 61 665
Provisions (36 772) (34 232)
29 135 27 433
Other receivables 126 153 61 080
Funds on call, bank balances and cash 235 025 141 119
TOTAL ASSETS 7 071 139 3 145 925
EQUITY AND LIABILITIES
Shareholders" equity and reserves 4 421 358 1 902 344
Non-current liabilities 743 239 461 841
Deferred taxation 291 014 206 045
Interest-bearing borrowings 452 225 255 796
Current liabilities 1 906 542 781 740
Taxation 38 905 16 726
Short-term loan 1 700 2 654
Provisions 274 737 27 608
Trade and other payables 969 968 229 640
Bank overdrafts 621 232 505 112
TOTAL EQUITY AND LIABILITIES 7 071 139 3 145 925
Net asset value per share - cents 3 693 2 538
Current ratio 2,4 2,8
Net interest-bearing debt: Equity (%) 4,3 12,1
Number of ordinary shares 119 725 487 74 960 623
In issue 122 887 075 78 404 200
Treasury (3 161 588) (3 443 577)
CASH FLOW STATEMENT
2005 2004
R"000 R"000
Cash generated from operating activities 755 052 620 379
Working capital changes (205 475) (232 670)
Cash generated from operations 549 577 387 709
Exchange rate difference on translation
of foreign entities (29 916) (12 235)
Unrealised surpluses arising from
hedged instruments 354 -
Net finance costs (15 431) (17 191)
Taxation paid (123 857) (183 470)
Dividend paid (79 986) (62 486)
Cash flows from operating activities 300 741 112 327
Investment in associate (575) -
Proceeds on disposal of preference shares - 5 162
Increase in financial assets (3 594) -
Acquisition of Wetherlys (1 641) (521 684)
Acquisition of Relyant Retail Limited (8 088) -
Purchase of property and equipment (100 584) (67 558)
Proceeds on disposal of property and
equipment 109 237 25 135
Cash flows from investing activities (5 245) (558 945)
Net proceeds from the issue of new shares 31 421 87 134
Increase in interest-bearing borrowings 196 429 148 544
Cash flows from financing activities 227 850 235 678
Net increase/(decrease) in cash and
cash equivalents 523 346 (210 940)
Cash and cash equivalents on acquisition
of Wetherlys - 50 555
Cash and cash equivalents on acquisition
of Relyant Retail Limited (318 594) -
Cash and cash equivalents at the beginning
of the year (56 931) 103 454
Cash and cash equivalents at the end
of the year 147 821 (56 931)
Attributable cash flow per share (cents) 425,4 236,4
STATEMENT OF CHANGES IN EQUITY
Insurance Non-
contin- distri- Distri-
R"000 Share Share gency butable butable
capital premium reserve reserves reserves Total
Balance at
31 August
2003 3 541 40 586 30 686 26 252 1 473 908 1 574 973
Opening
adjustment:
Straight-
lining of
operating
leases (11 570) (11 570)
3 541 40 586 30 686 26 252 1 462 338 1 563 403
Exchange rate
differences
arising on
translation
of foreign
entities (12 235) (12 235)
Issue of
shares 230 94 208 94 438
Treasury
shares
purchased
and held (23) (7 281) (7 304)
Net profit
for the year,
as restated 326 591 326 591
- Net profit
for the year
as previously
reported 329 050 329 050
- Prior year
adjustment:
Straight-
lining
portion of
operating
leases (2 459) (2 459)
Transfer to
insurance
contingency
reserve 5 754 (5 754) -
Transfer of realised
profits on disposal
of owner occupied
properties to
non-distributable
reserves 10 983 (10 983) -
Transfer of
revaluation
of investment
properties to
non-distributable
reserves 2 263 (2 263) -
Dividend
paid (62 549) (62 549)
- Total (64 409) (64 409)
- Treasury
shares 1 860 1 860
Balance at
31 August
2004 3 748 134 794 36 440 27 263 1 700 099 1 902 344
Exchange
rate
differences
arising on
translation
of foreign
entities (29 916) (29 916)
Unrealised
surplus
arising on
hedged
instruments 354 354
Issue of
shares 2 224 2 054 299 2 056 523
Treasury
shares
issued 30 8 171 8 201
Net profit
for the
year 563 878 563 878
Transfer to
insurance
contingency
reserve 6 832 (6 832) -
Capital
adequacy
reserve 39 (39) -
Transfer of
realised
profits on
disposal of
owner occupied
properties
to
distributable
reserves (12 131) 12 131 -
Transfer of
realised
profits on
disposal of
investment
properties
to non-
distributable
reserves (3 397) 3 397 -
Transfer of
revaluation
of investment
properties to
non-
distributable
reserves 281 (281) -
Dividend
paid (80 026) (80 026)
- Total (82 324) (82 324)
- Treasury
shares 2 298 2 298
Balance at
31 August
2005 6 002 2 189 093 43 272 (17 507) 2 200 498 4 421 358
COMMENTS
2005 will be regarded as the most eventful year in the 55-year history of
Ellerine Holdings Limited ("Ellerines").
Ellerines acquired the entire issued shareholding in Relyant Retail Limited
("Relyant"), previously quoted on the JSE, through the issue of 42,9 million
ordinary Ellerines shares. The results of Relyant for the four month period May
to August 2005 are included in the Group for the year under review.
The acquisition of Relyant will add over R3 billion of turnover to the Group
annually through the addition of its well established furniture retail brands,
essentially focused on the middle to upper end of the consumer market. This
provides the Group with access to the key middle market and enables the Group to
service all LSM groupings both in the cash and credit retail markets. The
Relyant credit to cash sales split of 60:40 has reduced the liquidity risk, as
well as the overall reliance of the Group on credit sales.
The addition of the R2,2 billion Relyant debtors ledger, which is in excellent
condition, adds a new dimension in terms of marketing opportunities, as well as
synergistic debt collection procedures to the Group.
The transaction has resulted in shareholders" equity increasing from R1,9
billion at August 2004 to R4,4 billion. This has resulted in the Balance Sheet
being further strengthened and the debt capacity of the Group increasing
substantially. The net asset value of the Group has increased by 46% to R36,93
from R25,38 per share.
The syndicated bank financing package provided to Relyant, which included the
encumbrance of the Debtors Ledger, has been cancelled and new unsecured short-
and long-term financial arrangements have been entered into with a number of
financial institutions on more favourable terms.
Operationally the integration process is substantially complete, with the
benefits already evident from a more focused marketing and merchandising
approach. The merger of the two Groups is progressing well and the extraction of
the synergistic benefits has commenced.
Trading environment
The South African trading conditions in the consumer durable goods market
continued to be buoyant for the year under review. Growth rates in consumer
demand during most of the year were unprecedented, particularly in the growing
middle market where a high proportion of our brands are focused.
The favourable economic conditions, assisted by the stable South African Rand
and low interest rates, benefited the furniture retailing market, particularly
in respect of the imported component within the merchandise mix.
The sale of merchandise by the Group at R2,8 billion increased by 62,9% over the
previous year. Excluding Relyant, merchandise sales were up by 19,1%.
FINANCIAL REVIEW - Continuing operations
Turnover
With the inclusion of Relyant for a four-month period the Group achieved a
turnover of R4,3 billion which reflects an increase of 52,9% over the previous
year. This was achieved despite the lower finance charge rates experienced
during the year in the Credit Divisions. Excluding Relyant, the increase in
turnover for the Group was 16,3%, before adjusting for unearned insurance and
finance charges provisions.
Given the lower interest rate environment, finance charges earned only increased
by 30,6% to R620,1 million. Excluding Relyant, finance charges earned at R475
million remained unchanged for the second successive year.
Revenue from financial services in respect of finance charges earned on term
loans and insurance premiums earned on insurance products provided to customers
in respect of goods sold and life cover at R777,8 million reflects an increase
of 47,4%, in line with merchandise sold. Excluding Relyant, financial services
contributed R601 million to revenue, an increase of 14,0% over the previous
year.
Operating profit
The operating profit for the Group for continuing operations at R752 million
increased by 47,6% over the previous year and the resultant operating margin
achieved was 17,4% (2004 - 18,0%). Margins in the cash retailing divisions are
lower than those in the credit divisions, which has had a negative impact
resulting in lower margins recorded during the year under review. Excluding
Relyant, the operating margin was 19,5% (2004 - 18,0%).
Operating expenses at R1,39 billion have increased by 45%. Costs have been well
controlled at 32,3% (2004 - 34%) of turnover. Excluding Relyant, operating costs
to turnover at 33,3% (2004 - 34%) have improved and reflect an increase of
12,7%, which is above inflation, but well below the increase in merchandise
sales of 19,1%.
The increase in consumer disposable income is reflected in the improved
condition of the Debtors Ledger. This has resulted in lower arrears and
increased collections. As a consequence, the required doubtful debt provisions
in terms of AC 133 have been reduced. Group debtors costs at R141,7 million have
increased by only 2%. Excluding Relyant, debtors costs at R123,4 million (2004 -
R138,4 million) reduced by R15 million.
Net finance costs
The net finance costs for the Group at R14,7 million have decreased by 14,0%
over the previous year in spite of the Group having taken on the additional R319
million debt resulting from the Relyant acquisition. The benefits of having re-
structured the Group"s debt and simplified the treasury were enjoyed for a two
month period since the acquisition of Relyant in May 2005.
Both long and short term debt has been secured by the Group from the various
major banks at favourable rates.
Abnormal items
During the year under review, as reported at the interim stage, the Group
disposed of 32 non-strategic properties for a sum of R87,5 million, as well as
certain other properties. The profit on this transaction was R53,5 million.
With the developments over the past twelve months, in having created the
enlarged Group, it became evident that the investment in Wetherlys-Spain was not
viable in terms of effort and reward. As a result, the remaining goodwill of
R16,8 million attributable to the investment has been fully impaired, inclusive
of the R7,8 million written down in February 2005.
Discontinued operations
During the second half of the financial year it was decided to discontinue both
operations in Wetherlys-Spain, as well as trading under the Glick"s brand.
In light of the above, the loss for the year from these operations at R13,6
million (2004 - R1,7 million) has been dealt with as a separate item and
comparative figures have been adjusted accordingly.
The details of discontinued operations are as follows:
2005 2005 2005
Spain Glick"s Total
Turnover 13 619 64 368 77 987
Cost of sales 13 834 44 599 58 433
Gross (loss)/profit (215) 19 769 19 554
Operating expenses 11 569 21 603 33 172
Operating (loss) (11 784) (1 834) (13 618)
Finance income/(costs) 4 (741) (737)
Loss for the year before taxation (11 780) (2 575) (14 355)
Taxation - 746 746
Loss for the year (11 780) (1 829) (13 609)
Headline earnings
Total headline earnings for the year at R528,6 million (2004 - R338,2 million)
reflect an increase of 56,3% and headline earnings per share at 590,6 cents
(2004 - 457,3 cents) show an increase of 29,1%.
The 42,9 million new shares issued to Relyant shareholders in May 2005 have been
weighted for the purpose of calculating the headline earnings per share.
Balance sheet
The Group Balance Sheet remains strong. Total equity at R4,4 billion reflects an
increase of 132% and total unencumbered assets at R7,1 billion, which includes
the goodwill on the acquisition of Relyant of R557 million, reflect an increase
of 124%.
Gearing at the gross borrowings level is 24,3% and at the net level, the gearing
is 4,3%. Given the low gearing level and the unencumbered gross debtors ledger
of R5,0 billion, the financial structure of the Balance Sheet remains sound,
with significant debt capacity.
Both return on average equity at 22,6% (2004 - 18,8%) and return on average
funds employed at 25,4% (2004 - 23,9%) show an improvement over the previous
year and are ahead of the financial objectives set by the Group.
Cash flow
Cash generated from operations at R550 million (2004 - R387 million), at 4%
above headline earnings, is a significant improvement over the previous year.
The improved sales mix with the shift towards cash, as well as the continued
improvement in the debtors ledger, assisted by well-managed inventories, has
resulted in the significant cash generation from the operations.
In light of the above, attributable cash flow per share at R4,25 (2004 - R2,36)
improved significantly.
OPERATIONAL SEGMENTAL REVIEW
Traditional - Credit Retail Division
The Traditional Retail Credit Division comprises the Ellerines, Town Talk and
FurnCity brands, as well as their trading counter-parts in the foreign
countries. With turnover at R2,2 billion (2004 - R1,9 billion) this equates to
an 11,4% increase in turnover, despite the fact that finance charges earned for
the period were unchanged. This represents a contribution of 50,3% to total
Group turnover. A pleasing performance was recorded in the sale of merchandise
for the second year in a row, particularly in the South African operations, with
an increase of 17,2%. Traditional brands in South Africa recorded record sales
in light of the buoyant lower to middle income consumer markets. It is pleasing
to note that the Ellerines brand was for the third year in succession ranked the
number one furniture brand in South Africa in the Sunday Times/Markinor survey.
The foreign operations were below budget and did not achieve the trading
densities expected. They finished the year only marginally ahead of last year.
The difficult trading conditions experienced in the foreign operations were
further impacted by the 13,4% devaluation of the Pula against the Rand which
impacted the Botswana outlets. Operations in foreign countries are in the
process of being re-engineered with particular emphasis on management, product
mix and procurement.
The operating margin achieved at 24,7% (2004 - 23,6%) was particularly
encouraging with the South African operations taking full advantage of the
buoyant trading conditions.
The improvement in the debtors ledger continued throughout 2005, with the
overall collection rate having improved from 5,9% in 2004 to 6,1%, a significant
improvement on the gross debtors ledger of R2,8 billion. Arrears reduced from
21% at August 2004 to 18,5%, which is a significant reduction from 25% two years
ago. As a consequence, in terms of the AC 133 provisioning requirements, the
doubtful debt provision was reduced by R46,9 million. As a result total debtors
provisions against the ledger which grew by R262 million only increased by R3,4
million. Given the improvement in consumer disposable income, it is anticipated
that the ledger will continue to improve further in the year ahead.
In South Africa the number of trading outlets increased by 18 and foreign
reduced by 3, resulting in the total number of outlets at 606 reflecting a net
increase of 15. Turnover per outlet once again increased on average by 8,6%,
with Ellerines and Town Talk recording an increase in excess of 10%.
Universal - Credit Retail Division
The Universal Credit Retail Division comprises Beares, Geen & Richards, Lubners
and Savells/Fairdeal, with
Geen & Richards trading in the middle to upper market while Beares and Lubners
are focused on the middle market and Savells/Fairdeal concentrates on the lower
end of the market.
The Universal Credit Chain with turnover of R633 million, for the four-month
period, contributed 14,7% of total turnover. Trading out of 415 outlets across
southern Africa, the cash sales component is 24%.
The Geen & Richards Business Unit has absorbed most of the Glick"s stores, and
the integration is complete.
All brands in this division traded ahead of budget expectations during the four-
month period.
At an average operating margin of 16,3% it is anticipated that the profitability
of this division will improve over the next 12 months.
The performance of the debtors ledger of R2,0 billion is excellent, with an
arrears percentage of 10,3% and a collection rate of 7,5%.
Wetherlys - Cash Decorating Division
Wetherlys turnover, excluding Spain, at R467,4 million (2004 - R346,8 million)
reflects a 34,8% increase, which constituted 10,8% of total Group turnover. The
operating margin for the full year was 13,3% (2004 - 16,6%). After a difficult
initial six-months period, during which costs were carried for new stores
opened, we are pleased to report that the operating margin for the second six
months at 15,7% has shown a significant improvement over the first six months,
during which period the operating margin was 10,7%. Having eliminated the
distraction of Spain and with a sound management team now in place, Wetherlys is
expected to continue to improve its contribution to Group earnings. This
division currently trades out of 12 Wetherlys outlets and 9 Osiers outlets. The
division attracts customers from the upper end of the market offering them a
choice of some 60 000 line items in this niche market. The contemporary range of
furniture, launched during the second six months, has been very well accepted by
the market and now accounts for around 20% of sales in the Wetherlys brand.
The second factory which was opened in the first quarter of this financial year
at Robertsville has now been bedded down and has significantly increased the
production levels of the Roodefurn manufacturing operations. Going forward, the
two factories will not only increase their share of the division"s sales, but
will also develop product for the greater Group.
Value Retail - Cash Division
With turnover of R245 million for the four-month period, the Value Retail Cash
Division which comprises Furniture City, Dial-a-Bed and Mattress Factory
contributed 5,7% of total Group turnover. The Value Retailing outlets focus on
the middle to upper market and trade out of 62 stores in South Africa. Trading
during the period was in line with budget.
Furniture City is in the process of market redirection and this process will
continue in the months ahead, while the Dial-a-Bed and Mattress Factory
operations have been refocused and it is anticipated that their performance will
be enhanced during the year ahead. These are strong brands and with the correct
market focus are capable of improved results.
Financial Services
The enlarged Financial Services operation comprises Relyant Insurance, Relyant
Life, Customer Protection Insurance Company and Rainbow Loans. This operation
offers customer protection insurance and funeral cover to our customers through
the credit retailing divisions. Rainbow Loans, which once again achieved
pleasing growth in both the quantum of loans advanced and profitability, offers
term loans focused at the lower to middle end of the market.
The contribution to turnover in respect of insurance premiums and finance
charges earned from Financial Services amounted to R778 million (2004 - R528
million) an increase of 47,4% and contributed 18,0% to total turnover. Turnover
in this operation is stated on an earned basis. After deducting unearned
insurance premiums and unearned finance charges, which together amounted to
R44,5 million for the year, gross premiums reflect an increase of 50% over the
previous year.
The general short-term insurance and life assurance licenses which Relyant
brings to the Group, will not only continue to enhance the contribution of this
operation through the supply of these services to third parties, external to the
Group, but will also facilitate the introduction of additional products into the
greater Group.
Due to the importance of this division, Bruce Sinclair, who is a member of the
Executive Committee, will be dedicated full time to expanding the financial
services offerings to the Group"s customer base of over two million, through the
1 100 retail outlets across southern Africa.
Service Division
Early Bird services which provides aerial installations and repair services for
audio and sound equipment and for home appliances achieved its budgets. While,
with a turnover of R21,4 million for the four months, it accounted for less than
1% of Group turnover, it provides a valuable service both to customers of the
various brands operated by the Group as well as to the public at large.
Steps have been taken to increase work flows from the expanded Group which
should have a positive effect on the profitability of the Early Bird operations.
Accounting Policies
The financial statements have been prepared on the historical cost basis, except
for certain investment properties and investments that are carried at fair value
and comply with South African Statements of Generally Accepted Accounting
Practice.
Operating leases with fixed rental escalations are now charged to the income
statement on a straight-line basis as opposed to a cash basis in previous years.
This has necessitated the raising of an accrual for lease expenses on the
balance sheet. This accrual will be reversed during the latter part of each
lease term when the actual cash flow exceeds the income statement charge.
Goodwill is no longer amortised and is now reviewed annually for impairment.
The determination of the R557 million goodwill at acquisition of Relyant has
been arrived at in compliance with the relevant International Financial
Reporting Standards (IFRS 3), which sets out the method for dealing with
business combinations and purchase price allocation.
In compliance with IFRS 1, the Group will adopt IFRS (International Financial
Reporting Standards) for the first time for its interim results to 28 February
2006.
Report of Independent Auditors
The Group"s independent auditors, Grant Thornton, have audited the Group"s
results. The unqualified report is available for inspection at the company"s
registered office.
The National Credit Bill
While the National Credit Bill was approved in parliament on 13 October 2005,
the final version of the Bill can only become effective once the Bill has been
debated at the National Council of Provinces and the regulations have been
published. Given that the draft regulations are only due to be published in the
first quarter of 2006 and that the authorities have indicated that there will be
a reasonable opportunity for affected parties to respond to them, the
anticipated date for promulgation of April 2006 appears to be optimistic.
The impact on the trading operations in the credit furniture industry is
expected to be significant. Management is, however, in the process of
formulating strategies to counteract any impact that the Bill may have on the
Group.
Prospects
The favourable trading conditions are expected to continue well into the 2006
financial year on the basis that the exchange rate and the Dollar price of oil
remain at current levels. It is not anticipated that any minor changes in
interest rates will materially affect the results of the Group.
With the new enlarged merged Group it is anticipated that synergies of at least
R45 million will be extracted during the 2006 financial year and this will
further enhance attributable earnings.
Given the positive trading scenario and the progress already made with the
Relyant acquisition, the Board is confident that a further improvement in
earnings will be achieved in the year ahead. Earnings will be further enhanced
by the inclusion of the Relyant operations for the full year which will include
the peak season trading period.
Declaration of Dividend
Given the projected strong cash flows of the merged Group, the Board has
resolved to declare an annual dividend, being dividend number 68 of 143,4 cents
per share (2004 - 105,0 cents per share) to ordinary shareholders. This
represents a dividend cover of three times headline earnings, and compares
favourably with the dividend cover of four times in the previous year. An
interim dividend will be declared, after the finalisation of the half year
results.
In compliance with the requirements of STRATE, the following dates are
applicable:
Last date to trade cum the dividend Thursday, 8 December 2005
Date trading commences ex the dividend Friday, 9 December 2005
Record date Thursday, 15 December 2005
Date of payment Monday, 19 December 2005
Share certificates may not be dematerialised or rematerialised between Friday, 9
December 2005 and Thursday, 15 December 2005 both dates inclusive.
Board of Directors
During the year under review the Board was re-constituted following the Relyant
acquisition, resulting in the following changes at Board level.
Messrs P Pohlmann, H Khoza and J Moore were appointed as non-executive directors
and B Sinclair was appointed as an alternate director to J Dritz on 11 May 2005,
at which time Mr P Pohlmann was elected as Chairman and Mr DS McGlashan, the
former Group Chairman, as Deputy Chairman.
Ms P Gumede and Mr P Swartz resigned from the Board on the 11 May 2005. The
Board acknowledges their contribution to the company and expresses its sincere
appreciation for their input while serving on the Board. Mr A van den Borne
stood down as an Executive Director from the main Board but continues in his
role as a member of the Executive Committee with enhanced responsibilities for
the enlarged Group in regard to marketing, merchandising and logistics.
By order of the Board
Peter Pohlmann Peter Squires
Chairman Chief Executive Officer
7 November 2005
Registered office: Gillooly"s View Office Park, Block E, Osborne Lane,
Bedfordview 2008
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited, 70
Marshall Street, Johannesburg PO Box 61051, Marshalltown, 2107
Auditors: Grant Thornton
Sponsors: Nedbank Capital.
Directors: P J B Pohlmann* (Chairman), DS McGlashan* (Deputy Chairman), TJ
Chalmers*, J M Moore*, H Khoza*, S Zungu*, PJC Squires (Chief Executive
Officer), RA Rawlings, J Dritz, R B G Sinclair (alternate to J Dritz)
(*Non-Executive Directors)
website: www.ellerines.co.za
SEGMENTAL ANALYSIS AUGUST 2005
DIVISIONAL
Traditional Universal Total
retailing retailing credit
Income statement:
Turnover 2005 2 171 064 632 926 2 803 990
2004 1 949 055 1 949 055
% v LY 11,4 43,9
Credit sales 2005 2 026 037 481 310 2 507 347
2004 1 825 512 1 825 512
% v LY 11,0 37,4
Cash sales 2005 145 027 151 616 296 643
2004 123 543 123 543
% v LY 17,4 140,1
Cash sales % 2005 6,7 24,0 10,6
2004 6,3 6,3
% v LY 0,4 4,3
Merchandise sales 2005 1 598 778 475 723 2 074 501
2004 1 390 262 1 390 262
% v LY 15,0 49,2
Operating profit 2005 535 795 103 172 638 967
2004 460 361 460 361
% v LY 16,4 38,8
Operating margin 2005 24,7 16,3 22,8
2004 23,6 23,6
% v LY 1,1 (0,8)
Depreciation 2005 41 340 4 154 45 494
2004 29 163 29 163
% v LY 41,8 56,0
Balance Sheet:
Assets 2005 2 364 734 1 822 166 4 186 900
2004 1 952 650 1 952 650
% v LY 21,1 114,4
Liabilities 2005 (197 252) (320 885) (518 137)
2004 (176 747) (176 747)
% v LY 11,6 193,2
Net Assets 2005 2 167 482 1 501 281 3 668 763
2004 1 775 903 1 775 903
% v LY 22,0 106,6
Cost to acquire
assets 2005 29 387 13 193 42 580
2004 30 825 30 825
% v LY (4,7) 38,1
Resources:
Number of stores 2005 606 415 1 021
2004 591 591
% v LY 2,5 72,8
Number of employees 2005 8 044 5 016 13 060
2004 7 731 7 731
% v LY 4,0 68,9
Retail m2 2005 379 245 291 890 671 135
2004 376 929 376 929
% v LY 0,6 78,1
Productivity ratios:
Merchandise sales:
Turnover 2005 73,6 75,2 74,0
2004 71,3 71,3
% v LY 2,3 2,7
Turnover per
store(*) 2005 3 583 4 575 3 986
2004 3 298 3 298
% v LY 8,6 20,9
Turnover per
employee(*) 2005 269 899 378 544 311 626
2004 252 109 252 109
% v LY 7,1 23,6
Operating profit
per employee(*) 2005 66 608 61 706 64 725
2004 59 547 59 547
% v LY 11,9 8,7
Turnover per m2 (*) 2005 5 725 6 505 6 064
2004 5 171 5 171
% v LY 10,7 17,3
m2 per outlet 2005 626 703 657
2004 638 638
% v LY (1,9) 3,0
Trade receivables:
Gross receivables 2005 2 835 779 1 951 213 4 786 992
2004 2 573 409 2 573 409
% v LY 10,2 86,0
Debtors costs 2005 117 160 17 120 134 280
2004 133 689 133 689
% v LY (12,4) 0,4
Debtors cost % (*) 2005 4,1 2,6 3,5
2004 5,2 5,2
% v LY (1,1) (1,7)
Average length of
book in months 2005 15,6 12,2 14,2
2004 15,3 15,3
% v LY 0,3 (1,1)
Arrears 2005 525 966 201 760 727 726
2004 541 694 541 694
% v LY (2,9) 34,3
Arrears % 2005 18,5 10,3 15,2
2004 21,0 21,0
% v LY (2,5) (5,8)
Collection rate % 2005 6,1 7,5 6,7
2004 5,9 5,9
% v LY 0,2 0,8
Deposit rate % 2005 18,0 18,0 18,0
2004 17,6 17,6
% v LY 0,4 0,4
*Ratios in respect of the Relyant brands have been annualised.
SEGMENTAL ANALYSIS AUGUST 2005
Value Total
Wetherlys retailing cash
Income statement
Turnover 2005 467 419 245 133 712 552
2004 346 830 346 830
% v LY 34,8 105,4
Credit sales 2005 64 753 64 753
2004
% v LY
Cash sales 2005 467 419 180 380 647 799
2004 346 830 346 830
% v LY 34,8 86,8
Cash sales % 2005 100,0 73,6 90,9
2004 100,0 100,0
% v LY 0,0 (9,1)
Merchandise sales 2005 463 283 227 143 690 426
2004 344 261 344 261
% v LY 34,6 100,6
Operating profit 2005 62 322 14 383 76 705
2004 57 668 57 668
% v LY 8,1 33,0
Operating margin 2005 13,3 5,9 10,8
2004 16,6 16,6
% v LY (3,3) (5,8)
Depreciation 2005 7 845 1 250 9 095
2004 5 020 5 020
% v LY 56,3 81,2
Balance Sheet:
Assets 2005 182 462 299 577 482 039
2004 176 255 - 176 255
% v LY 3,5 173,5
Liabilities 2005 (40 490) (123 358) (163 848)
2004 (46 798) - (46 798)
% v LY (13,5)
Net Assets 2005 141 972 176 219 318 191
2004 129 457 129 457
% v LY 9,7 145,8
Cost to acquire
assets 2005 10 031 3 962 13 993
2004 7 155 7 155
% v LY 40,2 95,6
Resources:
Number of stores 2005 21 62 83
2004 19 19
% v LY 10,5
Number of employees 2005 1 106 785 1 891
2004 931 931
% v LY 18,8 103,1
Retail m2 2005 43 075 70 706 113 781
2004 44 500 44 500
% v LY (3,2) 155,7
Productivity ratios:
Merchandise sales:
Turnover 2005 99,1 92,7 96,9
2004 99,3 99,3
% v LY (0,2) (2,4)
Turnover per
store(*) 2005 22 258 11 861 14 492
2004 18 254 18 254
% v LY 21,9 (20,6)
Turnover per
employee(*) 2005 422 621 936 814 636 075
2004 372 535 372 535
% v LY 13,4 70,7
Operating profit
per employee(*) 2005 56 349 54 967 55 775
2004 61 942 61 942
% v LY (9,0) (10,0)
Turnover per m2 (*) 2005 10 851 10 401 10 571
2004 7 794 7 794
% v LY 39,2 35,6
m2 per outlet 2005 2 051 1 140 1 371
2004 2 342 2 342
% v LY (12,4) (41,5)
Trade receivables:
Gross receivables 2005 3 358 214 885 218 243
2004 3 412 3 412
% v LY (1,6)
Debtors costs 2005 3 160 1 219 4 379
2004
% v LY
Debtors cost % (*) 2005 94,1 1,7 3,1
2004
% v LY
Average length
