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CASHBUILD LIMITED - CASHBUILD 1ST QUARTER OPERATIONAL UPDATE AND CAUTIONARY ANNOUNCEMENT 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 AND CAUTIONARY ANNOUNCEMENT In line with past disclosure, the Cashbuild board provides the following quarterly trading update. Cashbuild has continued to see healthy revenue growth of 20% in comparison to the first quarter of last year. Of the overall increase, 11% is attributable to stores in existence since the beginning of the prior reporting period (pre-existing stores) and 9% is attributable to growth through new stores opened since the end of the 2003 financial year (new stores). This robust growth is again attributable to the prevailing strong macroeconomic fundamentals, consumer confidence and the property culture being experienced throughout southern Africa. These increases are further under-pinned by strong growth in the number of transactions through our tills of 17% and an increase of 26% in the number of product units sold, in comparison to the 1st quarter of last year. The above increase in revenue has been achieved, together with improved percentage margins. Margins were negatively impacted in the prior year by deflation, which resulted in Cashbuild maintaining lower selling prices on stock purchased at pre-deflationary levels and a shift in product mix. This product mix has now settled at year-end levels, whilst inflation has returned in this quarter, to a level of 5%. Margin percentages have been further positively impacted by stricter management of obsolete and slow moving stock, through more intense focus on product ranging and finally, tighter control and management of voluntary mark-downs. The above improvements have been achieved whilst ensuring customers" requirements are met at all times which is evidenced by the increases in revenue, number of transactions and units sold. Stabilisation of the Botswana Pula exchange rate and the focus by management on improving internal operational efficiencies is bearing fruit in Botswana, with the result that the Botswanan operation is showing a strong improvement on the comparative period. Cashbuild"s balance sheet remains strong with working capital well under control. Management has increased stock holding levels in all stores to meet the growing demand and to ensure a continuous supply of goods in line with its "always in stock" policy. Cashbuild has opened two new stores in this quarter, with an additional two stores to be completed before December. One store was relocated in this quarter and four stores are currently being refurbished. The new information technology system "went live" at support office on 27 September 2004. The new system is in the process of being bedded down. The roll out of the new system to stores will start early 2005. Prospects Revenue growth in the month of October has continued to remain strong and there is every indication that the Christmas trading period will be a good one. The results for the first half of the financial year are materially affected by the Christmas trading period and therefore management provides no indication at this time of headline earnings expectations. Cautionary announcement Cashbuild is currently involved in discussions which may result in the introduction of its employee base as a black economic empowerment partner having a stake of up to 10% of the issued share capital in Cashbuild. Shareholders are accordingly advised to exercise caution when dealing in their securities until a further announcement has been made in this regard. Johannesburg 03 November 2004 Investment bank and Sponsor Nedbank Capital Date: 03/11/2004 01:45:05 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
