Connection Group has increased its interim headline earnings per share by 352.6%, and CEO Pierre Joubert says the group has demonstrated that its turnaround is sustainable.
Joubert says the retail division performed exceptionally well in the six months to end-November 2000, with Incredible Connection expanding to 22 stores from the 17 in May.
The group decided to expand the division aggressively in the period as prime sites became available and it was comfortable that it had a good working model. Another two or three new stores are planned for the second half.
"Besides increasing Incredible Connection`s gross lettable area by 12%, these new locations have significantly enhanced its national footprint and the quality of the leased property portfolio," he adds.
"Incredible Connection delivered a sound performance, largely because of increased sales volumes and a lower relative cost base."
Group turnover rose 8% to R358.83 million from R333.53 million in the same period of 1999, largely because of the greater number of Incredible Connection stores.
"As these new stores were opened at various stages of the period under review, their full impact on turnover will only be apparent in the second half of the financial year," Joubert says.
December sales were in line with expectations and up from the previous year.
Connection Group is aligning Enterprise Connection and Incredible Connection in a bid to expand Enterprise Connection`s client base and lower costs by integrating the businesses` support functions.
Joubert says Enterprise Connection provides services to small to medium enterprises, but a number of small businesses buy about 10 PCs at a time from Incredible Connection.
"Incredible Connection handles that market, but if Enterprise Connection does not target it, we are handing the services function to other companies."
Operating profit before interest rose to R7.57 million (1999: R2.42 million). Attributable profit fell to R5.58 million (R8.09 million), although the year-earlier figure was significantly boosted by exceptional items related to the disposal of Training Connection.
Headline earnings per share increased 352.6% to 2.53c (0.56c) and the group`s net asset value rose to 16.13c (11.85c) a share.
The net cash inflow fell from R3.29 million to R2.47 million, which Joubert says is mainly as a result of increased investment in stock, with the new stores opening and the Christmas period.
Joubert expects an improved second half, which is traditionally a stronger trading period. He also anticipates a better performance from the solutions business and benefits from the new stores.
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