Cashbuild tops last year"s successes

Cashbuild tops last year"s successes                                            
Cashbuild Limited                                                               
ISIN:ZAE000028320                                                               
JSE Share code: CSB                                                             
Cashbuild, southern Africa"s largest retailer of building materials, has        
reported its best-ever year with yet another strong increase in headline        
earnings per share - this time of 81%.                                          
This follows a 75% rise in eps for 2001 - 2002 and would seem to bear out       
management"s confidence in the company"s ability to maintain its long record of 
rewarding its shareholders and other stakeholders with consistently improving   
and sustainable results "into the foreseeable future".                          
Net asset value per share has increased by 35%, from 421 cents  (June 2002) to  
568 cents.                                                                      
The board has declared a final dividend of 40 cents per share, which together   
with the maiden interim, brings the full year"s dividend to 65 cents. This      
represents an 86% increase on the comparative year.                             
The improvement in headline earnings is mainly attributable to revenue growth in
both Cashbuild"s new and existing stores. Overall revenue increased by 24% for  
the year, with new stores contributing 8% and existing stores a creditable 16%. 
Cashbuild has for the last few years pursued an aggressive policy of organic    
expansion, undertaking to establish 10 new stores annually.  During the year    
that ended on 30 June, the company opened 11, bringing the total number of      
outlets at the end of the financial year to 113.                                
"Our commitment to this level of organic expansion will continue into the       
foreseeable future," said Cashbuild CE Pat Goldrick.  "We possess the resources 
in management, finance, and infrastructure to do it."                           
The group sells direct to a cash-paying customer base.  It carries an in-depth  
quality product range tailored to the specific needs of the communities it      
serves.  Its customers are typically home builders and improvers, contractors,  
farmers, traders and, increasingly, large construction companies and government-
related infrastructure developers.                                              
Gross profit improved by 26% compared to the previous 12 months, due to revenue 
improvement and a higher gross profit percentage. This improved percentage was  
principally due to better stock management, reduced shrinkage (0.4% of revenue),
the company"s buying power, and improved control of inventory ranging and       
obsolescence.                                                                   
Operating expenses increased for the reporting year by 15%. The group benefits  
considerably from economies of scale as new stores are established. New stores  
represented 8% of the increase, existing stores accounted for 7%.               
Financing income showed a healthy increase from R5.8 million to R9.5 million for
the year.                                                                       
Goldrick said working capital continued to be a focus of management"s attention,
with growth in inventories and trade liabilities in line with expectations,     
given current levels of revenue, the group"s "always in stock" strategy, and its
rate of organic expansion.                                                      
"Management is keenly aware of the need to balance customer requirements with   
the efficient management of its working capital."                               
As a result of a special project during the year, Cashbuild believes it has     
determined the optimal stock model for the business. This model has been applied
and is expected to lower overall stock levels while ensuring all stores are     
always in stock and providing the maximum return on assets employed.            
An on-going refurbishment programme is in place to revitalise all stores in the 
group and maximise returns on these investments.  Sites for new stores and the  
stores requiring refurbishment are identified on the basis of dependable        
demographic data that indicate unambiguously worthwhile revenue potential.      
Cashbuild aims to continue to increase its revenue by profitably growing market 
share to a minimum of 30%, according to Goldrick.                               
"Our prime target customer remains the cash-paying individual intent on         
necessary domestic improvements and structural repairs - and the contractor who 
services him.  We are also making headway in our efforts to increase revenue    
from government-related contracts."                                             
Goldrick said he was confident that Cashbuild"s markets would continue to grow, 
supported by government drives to increase home ownership, and the continued    
striving of private home builders and developers to meet the aspirations of more
and more home owners for larger homes and better housing.                       
Date: 27/08/2003 07:02:03 AM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department