Annual Report - JD Group

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Executive chairman’s report continued Operating income grew by 69% to R1,3 billion with the operating margin improving to 14,0% from 12,5%. Headline earnings increased to R871 million (2003: R453 million). Headline earnings per share rose by 53% to 522,0 cents (2003: 340,5 cents). Net instalment sale receivables only grew by 1,2% to R4,5 billion. This negligible increase is due to higher deposits, improved payment patterns and the write-off of already fully provided for accounts which have been transferred to Blake & Associates Holdings (Pty) Ltd (“Blakes”). Total provisions as a percentage of gross instalment sale receivables stand at 28,9% (2003: 31,9%). The Group continues to insure its South African instalment sale receivables. Bad debts written off in the historical operations increased from 5,9% to 6,9% of gross receivables. In addition, an amount of R101 million of fully provided for accounts from the historic chains has been transferred to Blakes thus enabling us to focus our attention on the front end of the book. This amount is reflected under corporate in the segmental analysis. This increases the bad debts written off in the historical book to 9,1%. An amount of R107 million relating to bad debts written off on instalment sale receivables arising at the date of acquisition of Profurn is disclosed in the segmental analysis under corporate. This amount was provided for at the time of the acquisition. This write off brings the quality of the instalment sale receivables acquired in line with that of the historic operations. Receivables’ arrears represented 12,5% of gross receivables, down from 17,4% at the last year end. It is significant to note that the rand amount of arrears reduced from R1,14 billion to R798 million. The average length of the book declined to 14,3 months. The Group has now finalised the fair values of the assets and liabilities acquired on the acquisition of Profurn. The amount of R329 million initially allocated as a provisional trademark, has been adjusted to R193 million which now reflects the amended allocation of the acquisition values. The impact of this restatement on the amortisation of trademarks is a reduction of R5,7 million in the current year. The amortisation period remains 10 years from the effective date of acquisition. The amortisation charge for future years would therefore approximate R19,3 million per annum. 16 Notwithstanding significant increases in sales, inventories increased marginally by 6,1% on the previous year. The Group currently has no gearing (2003: 26%). Cash generated by trading increased to R1,45 billion (2003: R816 million). This includes a net amount of R208 million collected on closed books of the acquired operations. Working capital cash requirements declined from R108 million to R38 million. Operational overview The past year saw significant focus being placed on the differentiation of our brands in order to capture as much of our target market as possible and at the same time to minimise competition between our own brands. Our direction has never been clearer and the critical issues enjoy top of mind awareness. Our strategy of maximising the potential of our brands through satisfying the changing needs of our customers is entrenched at all levels of our organisation. The Group now administers in excess of 1,7 million current customer accounts. President Dwight Eisenhower once said, ”wars are won in the planning room, not on the battlefield”. The successes achieved over the past year are clear indications of the direction of our strategy. However, we see ourselves at the beginning of this journey and very real value is still to be unlocked, the benefits of which will impact on the short, medium and long term. The spread of our brands and their clearly defined positioning obviously reduces risk to all investors and stakeholders. This is illustrated in the arrear profiles of the respective brands. Reduced risk enables our universal brands to work on lower product margin without this impacting on profitability. A total of 19 stores were closed in the BLNS countries. The Group is in the process of disposing of all 7 stores in Mozambique. These closures represent the Profurn legacy stores which were highlighted in the prior year’s segmental analysis as operations to be integrated, disposed of or discontinued. BoConcept In June we sold the master licence for “BoConcept UK”, 3 stores and the contracts division back to the Danish parent company. In addition we assigned another 2 leases and put the balance of the
“Wars are won in the planning room, not on the battlefield.” business, which was in effect 3 remaining leases, into voluntary liquidation on 29 October 2004. We remain convinced that BoConcept is an excellent retail format. The fact that we were not able to resolve our problems with Club 8 is in no way a reflection on the integrity and commitment of that company. With the best will in the world they were unable to fulfil their obligation in terms of the “Supply Agreement”. Notwithstanding our exiting BoConcept, we wish Club 8 every success in the future. Abra Our Polish operation is now on a sound footing and ready to grow. The task that lies ahead is the opening of stores and the development and training of our people. While much has been achieved on the “people” side, we have a long way to go before we can say that the Polish team has the skills, confidence and motivation to maximise the potential of that market. We intend to use Poland as a springboard into central and Eastern Europe. However we need a sustainable, profitable business in Poland before we can consider the next move. Nedcor Alliance During November 2004 a joint decision was taken to terminate the Alliance with effect from 19 November 2004. This termination will not have any material financial effect on either party. JD Group has had various approaches from other financial institutions President Dwight Eisenhower 17
Page 1 and 2: 21 Years Young Annual Report 2004
Page 3 and 4: In only 21 years, JD has grown from
Page 5 and 6: PROFILE JD Group, a mass consumer f
Page 7 and 8: Corporate objectives and opportunit
Page 9 and 10: Abra Barnetts Bradlows Electric Exp
Page 11 and 12: By 1986 trains can travel faster th
Page 13 and 14: Executive management Arie Neven (45
Page 15 and 16: Group value added statement 13 2004
Page 17: ■ Revenue up by 52% to R9,1 billi
Page 21 and 22: possible for me to mention by name
Page 23 and 24: 1990 1992 1994 The first McDonalds
Page 25 and 26: Social citizenship “. . . and our
Page 27 and 28: one million account holders. Based
Page 29 and 30: 1996 1998 2000 Penny Heyns scoops 3
Page 31 and 32: Abra - practical solutions for your
Page 33 and 34: Bradlows - you’re the difference
Page 35 and 36: Hi-Fi Corporation - the lowest pric
Page 37 and 38: Morkels - your two year guarantee s
Page 39 and 40: Russells - your home lifestyle part
Page 41 and 42: Score is absorbed into a reposition
Page 43 and 44: Ensuring that Group credit manageme
Page 45 and 46: Managing the procurement, maintenan
Page 47 and 48: Comprises a direct audit services d
Page 49 and 50: Group marketing is tasked to consta
Page 51 and 52: Responsible for the Group’s prope
Page 53 and 54: Influencing and shaping the Group
Page 55 and 56: A dream made real through the dedic
Page 57 and 58: Maxx New Media Concept and design G
Page 59 and 60: A brighter future to come Annual Fi
Page 61 and 62: “the way you behave when you are
Page 63 and 64: JD Group Limited board and manageme
Page 65 and 66: The purpose of this committee is to
Page 67 and 68: Employment benefits funds Approxima
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Fraud and illegal acts JD Group doe
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14 months 12 months 31 August 31 Au
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14 months 12 months 31 August 31 Au
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To the members of JD Group Limited
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Subsidiary companies Details of the
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Retirement Medical Cash Share schem
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Options Sale/ Sale/ exercised Date
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Options Sale/ Sale/ exercised Date
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Basis of accounting The annual fina
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are allocated using the effective i
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unrecognised actuarial gains and lo
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31 Group balance sheet Restated 200
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33 Notes to the Group cash flow sta
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35 Notes to the Group annual financ
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37 2004 2003 Rm Rm 4. Finance costs
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39 2004 2003 7. Earnings per share
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Vehicles and Computer Office equipm
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Vehicles and Computer Office equipm
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45 2004 2003 Rm Rm 12. Investments
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47 2004 2003 Rm Rm 15. Share capita
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18. Interest bearing liabilities co
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22. Financial risk management conti
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24. JD Group/Nedcor alliance The JD
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55 Segmental analysis - geographica
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Electric Express Morkels Barnetts S
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Corporate Group 2004 2003 2004 2003
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Salient features of The JD Group Em
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63 JD Group Limited - company finan
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Issued share capital Shares Direct
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67 Notice to shareholders Notice is
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Material changes Other than the fac
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JD Group Limited (Registration numb
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Shareholders’ diary Financial yea
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Annual Report - JD Group

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