Cashbuild Limited - Cashbuild 2nd Quarter Operational Update

Cashbuild Limited - Cashbuild 2nd Quarter Operational Update                    
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 2nd QUARTER OPERATIONAL UPDATE                                        
Cashbuild is currently in the process of finalising its results for the half-   
year ended 31 December 2005. In line with past practice and disclosure,         
Cashbuild herewith provides its quarterly trading update.                       
Revenue growth for the 2nd quarter of the financial year was a satisfactory 30% 
up on the comparable quarter of the prior year. Although in line with           
management"s expectations, it is lower than the 43% growth experienced during   
the first quarter. This equates to a 35% increase for the first half of the     
financial year.                                                                 
Stores in existence since the beginning of July 2004 (pre-existing stores)      
contributed 19% of the increase, whilst the 22 stores that were opened since the
end of the 2004 financial year (new stores), contributed 11%. Transactions      
through the tills increased by 27% and the number of units sold for the quarter 
increased by 17% in comparison to the prior period.                             
Cashbuild continued to experience a favourable trading environment and these    
coupled with initiatives to grow the top line have contributed to the overall   
increase in revenue.                                                            
Gross margins in first quarter were under slight pressure but have recovered to 
our expected levels during this quarter.                                        
Cashbuild continued its strategy to invest in the business in order to step up  
and support the future growth of the company. The areas of operational expenses 
influenced by this strategy are:                                                
Continued intense and comprehensive advertising campaign                        
The free local customer delivery service (currently at budgeted levels)         
People investment                                                               
Appointment of an experienced operations manager to concentrate on the growth of
the neighboring countries                                                       
Additional people employed and extra shifts worked to cope with volumes and to  
ensure that suppliers are paid timeously                                        
Extra staffing in support of our extended trading hours                         
Additional internal security and field auditors                                 
A 15% salary increase (effective 1 July 2005) for the majority of non-managerial
employees at store level resulting from the implementation of Cashbuild"s formal
grading system (equating to a total company increase of 9%)                     
Continued technical and professional support to remedy issues in the            
implementation of the new IT system.                                            
A total of seven new stores were opened during this quarter plus one            
refurbishment and one relocation. Cashbuild for the first time opened a record  
11 new stores during the half-year period. This equals the highest number of    
stores ever opened during a full financial year. This doubling on opening new   
stores also results in an increase to opening costs, with the real revenue and  
profit benefits only materialising at a later stage. The principle reasons for  
the step up of new store openings are:                                          
Cashbuild has been perusing a number of sites during the past five years, which 
have now started to come to fruition                                            
Shopping centers are now being built in rural areas and townships where         
Cashbuild is a strong brand and a preferred tenant                              
At the end of the half-year 144 stores were trading.                            
Although this investment strategy together with the stepped-up store expansion  
is putting earnings for the first half under pressure, management has put in    
place a comprehensive operational plan to ensure that the stated objective of   
growing operating profits by at least 10% in excess of inflation, will be       
achievable for the full year.                                                   
IT                                                                              
The corrective action plan put in place by management to address the problems   
experienced with the new IT system at support office remains an area of high    
priority.                                                                       
Prospects                                                                       
A further trading update with indications of earnings expectations for the half-
year will be published at the end of February 2006.                             
Johannesburg                                                                    
19 January 2006                                                                 
Sponsor                                                                         
Nedbank Capital                                                                 
Date: 19/01/2006 04:16:51 PM Supplied by www.sharenet.co.za                     
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