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CASHBUILD LIMITED
("CASHBUILD")
THE BUILDERS' DISCOUNT STORE
REGISTRATION NUMBER 86/01503/06
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
INTERIM REPORT
THE UNAUDITED INTERIM RESULTS FOR CASHBUILD LIMITED AND ITS SUBSIDIARIES FOR
THE 26 WEEKS ENDED 24 DECEMBER 1998 TOGETHER WITH THE RESULTS FOR THE 26 WEEKS
ENDED 27 DECEMBER 1997 ARE AS FOLLOWS:
HIGHLIGHTS:
* 10% GROWTH IN SALES ON COMPARATIVE BUSINESS
* 27% GROWTH IN HEADLINE EARNINGS
* SIGNIFICANT REDUCTION IN NET FINANCING CHARGES
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SUMMARISED GROUP INCOME STATEMENT
UN- UN-
AUDITED AUDITED CHANGE AUDITED
R'000 1998 1997 % JUNE 1998
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TURNOVER 491 934 472 439 4.1 910 217
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OPERATING PROFIT 9 323 11 604 (19.7) 20 787
NET FINANCING CHARGES (889) (3 751) - (6 349)
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INCOME BEFORE TAXATION 8 434 7 853 7.4 14 438
TAXATION (2 162) (2 713) (4 596)
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INCOME AFTER TAXATION 6 272 5 140 22.0 9 842
OUTSIDE SHAREHOLDERS'
INTEREST (655) (718) - (1 152)
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INCOME ATTRIBUTABLE TO
SHAREHOLDERS 5 617 4 422 27.0 8 690
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NUMBER OF SHARE IN
ISSUE ('000S) 23 225 12 225
EARNINGS PER SHARE (CENTS) 24.2 19.0 27.0 37.4
HEADLINE EARNINGS PER
SHARE (CENTS) 23.9 18.8 27.1 37.3
DIVIDEND PER SHARE (CENTS) - - - 12.0
DIVIDEND COVER (TIMES) - - - 3.1
DEPRECIATION 5 233 5 900 - 12 840
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SUMMARISED GROUP BALANCE SHEET
UNAUDITED UNAUDITED AUDITED
R'000 1998 1997 JUNE 1998
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CAPITAL EMPLOYED
SHAREHOLDERS' FUNDS 73 295 66 197 67 680
OUTSIDE SHAREHOLDERS' INTEREST 4 896 5 078 4 241
INTEREST-BEARING DEBT 5 973 18 237 6 396
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84 164 89 512 78 317
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EMPLOYMENT OF CAPITAL
FIXED ASSETS 57 219 68 193 61 285
UNLISTED INVESTMENTS 6 264 6 499 6 454
CURRENT ASSETS 213 177 217 729 191 554
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TOTAL ASSETS 276 660 292 421 259 293
INTEREST-FREE LIABILITIES 189 007 199 590 177 487
DEFERRED TAXATION 3 489 3 319 3 489
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84 164 89 512 78 317
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CAPITAL EXPENDITURE 1 872 7 104 15 889
NET ASSET VALUE PER SHARE (CENTS) 337 307 310
CAPITAL COMMITMENTS 125 14 490 3 000
CONTINGENT LIABILITIES 12 252 12 252 12 252
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SUMMARISED GROUP CASH FLOW STATEMENT
UNAUDITED UNAUDITED AUDITED
R'000 1998 1997 JUNE 1998
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CASH FLOWS FROM
OPERATING ACTIVITIES 3 586 46 662 56 339
CASH FLOWS FROM
INVESTING ACTIVITIES (1 079) (7 636) (12 088)
CASH FLOWS FROM
FINANCING ACTIVITIES (233) (26 692) (34 756)
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NET INCREASE IN CASH
AND CASH EQUIVALENTS 2 274 12 334 9 495
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 14 290 4 795 4 795
CASH AND CASH EQUIVALENTS
AT END OF PERIOD/YEAR 16 564 17 129 14 290
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COMMENTARY
INTRODUCTION
THE GROUP HAS PERFORMED SATISFACTORILY IN VERY DIFFICULT TRADING CONDITIONS.
STEADY IMPROVEMENTS HAVE BEEN NOTED DURING THE PERIOD UNDER REVIEW IN KEY AREAS
OF OUR BUSINESS, INTER ALIA, THE INCREASE IN TRANSACTION VOLUMES, MARKET
DOMINANCE IN KEY PRODUCT LINES, THE IMPROVEMENT IN PERFORMANCE FROM COUNTRIES
OUTSIDE THE RSA AND THE STRENGTHENING OF GROSS MARGINS.
IT IS IMPORTANT TO RECOGNISE THAT THE COMPARATIVE FIGURES INCLUDE THE RESULTS
OF CREDITBUILD (PTY) LTD ("CREDITBUILD") WHICH WAS SUBSEQUENTLY DISPOSED OF ON
1 MARCH 1998. THE RATIONALE FOR DISPOSING OF CREDITBUILD WAS TO ENABLE THE
GROUP TO FOCUS ON THE CASH CUSTOMER AND TO PROVIDE RELIEF FROM FINANCING A
GROWING DEBTORS' BOOK.
COMMENTS ON THE FINANCIAL PERFORMANCE
THE GROUP HAS GROWN HEADLINE EARNINGS PER SHARE 27% FROM 18.8 CENTS PER SHARE
TO 23.9 CENTS PER SHARE IN THE 26 WEEKS UNDER REVIEW OVER THE CORRESPONDING
PERIOD IN THE PREVIOUS YEAR. WHEN EXCLUDING THE RESULTS OF CREDITBUILD FROM THE
PREVIOUS YEAR COMPARATIVE THE ATTRIBUTABLE EARNINGS GROWTH EQUATES TO 60%. THE
GROWTH IN TURNOVER IS A MODEST 4% BUT WHEN EXCLUDING THE IMPACT OF CREDITBUILD
IS AN ACCEPTABLE 10% OR R43.8 MILLION. WHILST THE OPERATING PROFIT HAS DECLINED
BY 20% FOLLOWING THE LOSS OF CREDITBUILD'S HIGH MARGIN BUSINESS, THE GROWTH IN
PROFIT BEFORE TAX OF 7.4% SHOWS THE IMPACT OF THE SIGNIFICANT INTEREST SAVINGS
WHICH HAVE BEEN MADE FOLLOWING THE DISPOSAL OF CREDITBUILD. WE ARE PARTICULARLY
PLEASED THAT THE OPERATING INCOME GROWTH ON THE COMPARABLE PERIOD LAST YEAR,
WHEN EXCLUDING CREDITBUILD, HAS BEEN A MORE ROBUST 26%.
THE GROWTH IN CAPITAL EMPLOYED FROM THE PREVIOUS FINANCIAL YEAR END TO R84.2
MILLION CAN BE ATTRIBUTED TO THE HIGH LEVEL OF WORKING CAPITAL REQUIRED TO
SUPPORT DECEMBER SALES.
PROSPECTS
CASHBUILD APPROACHES THE SECOND HALF OF THE FINANCIAL YEAR WITH CONFIDENCE. IT
IS CLEAR THAT THE HIGH INTEREST RATE CLIMATE WILL CONTINUE TO NEGATIVELY
INFLUENCE CONSUMER BUYING BEHAVIOUR. WE BELIEVE THAT THE PRESSURE ON SALES WILL
BE COMPENSATED FOR BY TAKING ADVANTAGE OF IMPROVED PRODUCT RANGING AND BETTER
BUYING OPPORTUNITIES. IN ADDITION THE GROUP CONTINUES TO IMPROVE CONTROL
PROCESSES IN ORDER TO OPTIMISE THE BUSINESS INFRASTRUCTURE. THE CONTINUED FOCUS
ON REDUCING THE WORKING CAPITAL EMPLOYED IN THE BUSINESS WILL ENSURE THAT
INTEREST CHARGES REMAIN AT AN ACCEPTABLE LEVEL. AS A RESULT, EARNINGS FOR THE
REMAINDER OF THE YEAR SHOULD CONTINUE TO SHOW THE GAINS OF THE FIRST 26 WEEKS.
YEAR 2000 COMPLIANCE
THE GROUP HAS IMPLEMENTED A COMPREHENSIVE YEAR 2000 STRATEGY WHICH INCLUDES
TESTING FOR COMPLIANCE. NO MATERIAL EXPENDITURE IS ANTICIPATED TO ACHIEVE
COMPLIANCE. NO SIGNIFICANT OPERATIONAL DIFFICULTIES ARE ANTICIPATED IN THE
ABILITY OF CASHBUILD'S INFORMATION TECHNOLOGY SYSTEMS TO HANDLE THE ADVENT OF
THE YEAR 2000.
INTERIM DIVIDEND
IN ACCORDANCE WITH GROUP POLICY NO INTERIM DIVIDEND IS DECLARED.
ON BEHALF OF THE BOARD
C STASSEN PK GOLDRICK
CHAIRMAN CHIEF EXECUTIVE
JOHANNESBURG
16 FEBRUARY 1999
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REGISTERED OFFICE
CNR AEROTON AND AERODROME ROADS
AEROTON, JOHANNESBURG
PO BOX 90115, BERTSHAM 2013
TRANSFER SECRETARIES
MERCANTILE REGISTRARS LIMITED
11 DIAGONAL STREET, JOHANNESBURG
PO BOX 1053, JOHANNESBURG 2000
DIRECTORS:
C STASSEN (CHAIRMAN)*, PK GOLDRICK (CHIEF EXECUTIVE) (IRISH), BDW BROWN
(BRITISH), CA DINHAM, SIS DU TOIT, JJ FOUCHI*,
JF LE ROUX*, RA LISTER, D MASSON*, C MOORE*
(* NON-EXECUTIVE)
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NORTHERN GRAPHICS J9/0203
