Annual Report - JD Group

■ Revenue up by 52% to R9,1 billion
■ Operating income up by 69% to R1,3 billion
■ Headline earnings per share up by 53%
to 522,0 cents
■ No gearing
Achieving the goals is then all about effective implementation.
Operating environment
The favourable economic conditions in the local durables retail
market prevailed throughout the financial year. The benefits
flowing from the real growth in consumers’ disposable income has
materially reduced the credit risk profile of the Group and has
further enhanced the cash generated.
Financial overview
The comparative figures for the year to 31 August 2003
(“comparative period” or “2003”) only included the results of
the ex-Profurn Limited (“Profurn”) stores for the five months from
23 April 2003.
Revenue increased by 52% to R9,1 billion (2003: R6,0 billion),
the sale of merchandise increased by 61% to R6,1 billion
(2003: R3,8 billion). The increase in revenue represents like on like
growth of 16% in the historical operations in southern Africa and
17% in the acquired businesses. Sale of merchandise constituted
68% of total revenue (2003: 64%), with the remainder being
finance charges, financial and other services.
Southern African revenue contributed 97% of total revenue
(2003: 95%). Abra grew revenue in Zloty terms by 26%.
Credit sales accounted for 50,4% of total sales (2003: 62,0%),
considerably lower than the corresponding period. This is largely
attributable to the inclusion of Hi-Fi Corporation for the full year
which is a cash business and also to an increase in cash sales in the
other chains.
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It is most gratifying to note that the Group was able to increase
overall product margin to 32,3% (2003: 31,6%) notwithstanding
the inclusion of Hi-Fi Corporation which operates as a discounter
working on lower margins. Stock markdowns of R49 million
(2003: R38 million) were incurred due primarily to product
deflation. Retail prices of electrical goods declined by 11% due to
the strength of the rand and a decline in US dollar prices. This
impacted on Hi-Fi Corporation as well as the electrical goods
component of our credit chains in southern Africa. Furniture
inflation during the past financial year was 1%.
Finance charges earned increased by 31% over the comparable
period to R1,5 billion. Financial services, which includes all the
Group’s insurance offerings, increased by 44% to R1 095 million.
This combined contribution to revenue is relatively lower due to
the lower credit sales to revenue ratio and the lower interest rate
environment.
Operating expenses grew by 37% to R3,5 billion. The increase in
southern African costs was largely due to the inclusion of Profurn
for the full year.
The R306 million operating loss reflected under corporate in the
segmental analysis includes expenses of R65,3 million relating to
both historic and acquired operations which are of a non-recurring
nature and therefore cannot be allocated to the individual chains
without distorting the ratios.