IT and photographic retailer Connection Group has reported sales of R1 billion and headline earnings per share growth of 37.8% to 125.05c (90.76c) in the year to the end of August.
The group reported a pre-tax profit up 34% to R57 million and cash generated of R74.5 million, representing a 104% cash conversion ratio.
The group will delist at the end of November when it is expected that the R500 million takeover by furniture organisation JD Group will be finalised. The acquisition is subject to Competition Commission approval.
Shareholders have seen the price rise from a low of 180c in 2000 to the present offer price of 1 475c, an average compounded all-in return of 54% per annum over the past five years.
A dividend of 35c has been declared, payable on 7 November 2005, which implies that those on the register before JD Group`s takeout will receive the dividend in addition to the 1 475c - a total of 1 510c.
Connection Group notes that Incredible Connection was again the mainstay of the group, contributing R985 million or 92% of sales.
The pre-tax return on sales rose to 6.5% (6%) in spite of lower prices. Four new stores were opened, bringing the total number to 34. Three new stores will open in the next two months.
Photo Connection grew by another 12 outlets, with the acquisition of Beyondit in November 2004, bringing the total number to 27. Photo Connection met expectations in producing an operating profit of R5.2 million on sales of R75.4 million.
"It was our most successful year ever," says Connection Group CEO Grattan Kirk. "Our prices on average declined by 7%, but as the turnover figure indicates, volumes of IT products and photographic equipment more than made up for the price deflation."
Kirk says Incredible Connection would continue to grow organically. The photographic shops would also grow notwithstanding the slow demise of film-based photography. He says the challenge is to persuade more customers to process the vast number of digital pictures they are taking.
Kirk says it would be business as usual inside the JD Group. He adds that the chemistry with JD Group is excellent.
The purchase means JD Group acquires access to IT names such as HP, Acer and Packard Bell.
JD Group`s offer price of 1 475c plus the dividend of 35c puts Connection`s market capitalisation at R580 million.
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