To view the PDF file, sign up for a MySharenet subscription.

CASHBUILD KNOCKED BY INVENTORY DISCREPANCIES

Release Date: 28/09/2000 17:42
Code(s): CSB
Wrap Text

BUILDING MATERIAL RETAIL CHAIN CASHBUILD HAS REPORTED AN OPERATING PROFIT AFTER EXCEPTIONAL ITEMS OF R1,0M FOR THE YEAR TO JUNE 30, 2000 REPRESENTING A DROP OF 94% ON LAST YEAR'S R16,8M. TURNOVER, HOWEVER, SHOWED A SMALL INCREASE OF 3%, REACHING THE R955,6M MARK FOR THE YEAR.
THE LOSS ATTRIBUTABLE TO SHAREHOLDERS AMOUNTS TO R1,2M OR 5 CENTS A SHARE, COMPARED WITH THE R7,5M PROFIT OF LAST YEAR, WHICH REPRESENTED EARNINGS OF 33 CENTS PER SHARE.
A POSITIVE CASH FLOW HAS RESULTED IN A SUBSTANTIAL REDUCTION IN FINANCING CHARGES, WHICH REDUCED BY 84% TO R601 000 (R3,7M) AND LEAVING A CASH BALANCE OF R28,0M AT YEAR END.
MD PAT GOLDRICK ATTRIBUTED THE POOR PERFORMANCE TO REDUCED VOLUMES DURING THE VERY WET PERIOD, SQUEEZED MARGINS DURING TOUGH TRADING CHARACTERISED BY SHRINKING DISPOSABLE INCOME AND A DISCREPANCY IN INVENTORY, DISCOVERED WHEN FINALISING THE YEAR-END ACCOUNTS.
"WE ARE STILL FINALIZING THE EXTENT OF THE DISCREPANCIES AND HAVE APPOINTED NEW FINANCIAL MANAGEMENT, AS WELL AS A TEAM OF TEMPORARY ACCOUNTANTS TO ASSIST IN THIS REGARD.
ESSENTIALLY THE PROBLEM STEMS FROM A BREAKDOWN OF INTERNAL CONTROLS BETWEEN THE BRANCHES AND HEAD OFFICE IN DOCUMENTING THE RECOVERY OF GOODS RETURNED TO THE STORES.
"WE EXPECT TO RECOVER SOME OF THESE LOSSES WITHIN THE NEXT THREE MONTHS, AND WE WILL GIVE A FULL REPORT ON THE EXTENT OF THE LOSSES SUSTAINED IN FOUR MONTH'S TIME."
WHILE SALES HAD BEEN RELATIVELY BUOYANT DURING THE FIRST SIX MONTHS, HELPED IN PART BY THE IMPACT OF DEMUTUALISATION PAYOUTS, TURNOVER DURING THE SECOND HALF HAD BEEN HARD HIT BY THE FLOODS IN THE NORTH OF THE COUNTRY, WHICH HAD BROUGHT BUILDING OPERATIONS VIRTUALLY TO A STANDSTILL, SAID GOLDRICK.
HE WAS CONFIDENT PROFITABILITY WOULD BE RESTORED. "WE ARE FOCUSING ON THE MANAGEMENT OF INVENTORY, AS WELL AS TO FURTHER IMPROVE CASH FLOW. WE HAVE ALSO AUGMENTED THE PRODUCT MIX WITH A NEW FOCUS ON HIGHER MARGIN OFFERINGS THROUGHOUT THE CHAIN'S 95 STORES."
GOLDRICK SAID SPENDING TRANSACTIONS WERE AVERAGING SOME 75 000 A WEEK, RISING TO 135 000 DURING PEAK TRADING PERIODS. TURNOVER WAS EXPECTED TO INCREASE FURTHER WITH THE RECENT INTRODUCTION OF A TELEVISION ADVERTISING CAMPAIGN, WHICH HAD ALREADY RESULTED IN HIGHER SALES. A NEW STORE OPENED IN SWAZILAND SINCE YEAR-END WAS ALSO PRODUCING EXCELLENT TURNOVER.
DONALD MASSON HAS BEEN APPOINTED CHAIRMAN WITH IMMEDIATE EFFECT. A MEMBER OF CASHBUILD'S BOARD SINCE 1988, HE WAS INSTRUMENTAL IN THE RECOVERY OF SEVERAL MAJOR SOUTH AFRICAN OPERATIONS, INCLUDING TRADEGRO, KANHYM AND THE POST OFFICE. ALTHOUGH HE HAS BEEN APPOINTED IN A NON-EXECUTIVE CAPACITY, HE PLANS TO TAKE AN ACTIVE ROLE IN THE RUNNING OF THE COMPANY AND WILL, INITIALLY, SPEND AT LEAST ONE DAY A WEEK WITH CASHBUILD'S EXECUTIVE.
MASSON REPLACES CAREL STASSEN AS CHAIRMAN, WHOSE RESIGNATION FOLLOWS PEPKOR'S SALE OF ITS CONTROLLING SHARE IN CASHBUILD. PEPKOR IN JUNE SOLD 46,3% OF ITS STAKE TO CASHBUILD MANAGEMENT, STAFF, SUPPLIERS AND SEVERAL FINANCIAL
INSTITUTIONS, RETAINING 12,4% OF ITS EQUITY. AS A RESULT OF THIS MOVE, TWO OTHER DIRECTORS NOMINATED BY PEPKOR HAVE ALSO RESIGNED FROM THE BOARD. STASSEN REMAINS AS A DIRECTOR. ENDS
ISSUED BY DE KOCK & KERKHOFF COMMUNICATION CONSULTANTS ON BEHALF OF CASHBUILD
DATE ISSUED THURSDAY, 28 SEPTEMBER 2000 MEDIA ENQUIRIES PAT GOLDRICK, MD CASHBUILD (011) 248 1602
BEN DE KOCK, DEK&K (021) 424 5280 PIPPA HOOPER DE KOCK & KERKHOFF COMMUNICATION CONSULTANTS TEL +27 21 424 5280 FAX +27 21 424 5290 E-MAIL PIPPA@DKK.CO.ZA WWW.DKK.CO.ZA

Share This Story