Edcon today announced a profit before tax of more than R1 billion and another year of triple digit growth in both headline earnings per share and dividends per share for the year ended March 2004. Its headline earnings per share rose by 103% to 1597 cents, while its dividends per share rose by an even greater 149% to 768 cents for the year.
“This is the second consecutive year that our earnings have more than doubled, reflecting another outstanding year across all areas of the business and further demonstrating we have established a solid, sustainable platform for ongoing future growth,” Chief Executive of Edcon, Steve Ross said today.
Key features of the results:
Return on equity rose to 28,3% from 15,7% a year ago
Retail sales growth of 27% to R10,5 billion, with only 2% additional average retail space
Wealth created for all stakeholders of R2,5 billion
Edgars grew sales by 16% and trading profit by 43%. Stock turned 5,2 times in the year
The Jet chain (Jet, Sales House, Cuthberts and Legit) achieved sales growth of 23% and grew its trading profit by 127%. Stock turned 7,2 timesin the year
Both Super Mart and CNA contributed to group profits, with CNA producing a small profit in its first full year of trade under Edcon management
The Manufacturing Division, after a poor result at the interim stage, posted a small profit for the second half
The Credit and Financial Services businesses increased earnings by 165% to R137 million
Gearing of 6%
“Results of this magnitude have been possible because we offer exceptional value to our customers by containing ‘back room’ costs whilst delivering quality product and service,” Ross said.
He further mentioned that, “Both CNA and Super Mart have been estructured aggressively and the new financial year will be the first in which they are fully integrated into Edcon’s systems and structures. As a result, we see significant opportunities to increase market share, improve stock turns and generate higher profits from these businesses in the year ahead.”
Edcon will be securitising a further R1 billion of its debtors’ book during June 2004. This transaction will be positive for earnings as it will reduce Edcon’s funding costs. The cash generated will be utilised to repay debt and fund internal and external expansion. In February 2004, Moody’s Investor Service upgraded the credit rating of the Class B notes that fund Edcon’s existing securitised debtors’ book, reflecting a lower bad debt experience on these debtors.
Ross highlighted, “The primary factor underpinning these results has been the Edcon people who have achieved an internal culture of excellence and performance through training and leadership development.”
“The impact on the bottom line of actively engaging staff in the running of our business cannot be underestimated,” Ross said. “Sustained growth, both organic and through acquisition, must be driven with support from the whole organisation,” he added.
Based on the current strength of the apparel retail market, the contribution from new space, as well as an improvement in profitability of the recently acquired businesses, Ross said he is confident the Group will continue to deliver growth for shareowners as headline earnings per share are expected to increase at a somewhat faster rate than sales.