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CASHBUILD LIMITED - CASHBUILD 2ND QUARTER OPERATIONAL UPDATE

Release Date: 12/01/2005 17:01
Code(s): CSB
Wrap Text

CASHBUILD LIMITED - CASHBUILD 2ND QUARTER OPERATIONAL UPDATE Cashbuild Limited (Incorporated in the Republic of South Africa) (Registration number 1986/001503/06) Share code: CSB ISIN: ZAE000028320 ("Cashbuild" or "the company") CASHBUILD 2ND QUARTER OPERATIONAL UPDATE Cashbuild is currently finalising its results for the half-year ended 31 December 2004. In line with past disclosure, Cashbuild herewith provides its quarterly trading update. Cashbuild"s robust growth has continued into the second quarter with a 33% increase in revenue on the same period last year. Particularly encouraging to management, is a healthy 23% improvement in the performance of comparable stores. This, together with the 20% improvement in the first quarter has resulted in a 27% overall increase in revenue for the first half of the financial year. With inflation at 7%, driven mainly by Safcol price increases in timber and Ispat Iscor related steel price increases this improvement in revenue has been achieved from real growth as illustrated by a 25% increase in transactions through our tills for the second quarter (first quarter - 22%) and a 37% increase in units of products sold (first quarter - 26%). These improvements have been achieved largely as a result of the continued positive macro-economic environment, consumer confidence and the strong property culture permeating throughout southern Africa. Cashbuild"s focus on its core strategies of `always in stock", `lowest everyday prices", our free delivery service, as well as our highly successful campaign based on "life offers no guarantees, but Cashbuild does", have had a positive impact on Cashbuild"s revenue. The above increase in revenue has been achieved together with improved percentage margins. Deflation had a negative impact on margins during the prior year, which resulted in Cashbuild maintaining lower selling prices on stock purchased at pre-deflationary levels, and a shift in product mix. It is apparent, from the exceptional increase in units sold, the change in mix continues to play a role in Cashbuild" success, as high volume / low margin items continue to drive revenues higher. This change in mix is however, more than compensated for by the increase off the deflationary resultant low base of the prior year. Overheads show a substantial increase on the prior period owing to costs associated with the employment and development of our people to support our planned future growth, the advertising campaign and free delivery service mentioned above. This together with management"s anticipated increase in the costs involved in the implementation of a new IT system have contributed to the increase in overheads. Cashbuild"s expansion plans continue in a controlled manner with four new stores opened in the first half of this financial year, an additional one store relocated, one store refurbished and five stores currently in the process of refurbishment. The new IT system "went live" on 27 September 2004 and is in the process of being bedded down. Prospects Revenue growth in the first two weeks of January 2005 continues the trend shown in the second quarter and we have every expectation that these growth levels, barring any unforeseen circumstances or significant macro-economic events, should continue into the second half of this financial year. Johannesburg 12 January 2005 Sponsor Nedbank Capital Date: 12/01/2005 05:01:04 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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