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Edgars to continue with the aggressive new accounts growth
12 Mar 2012 at 00:47hrs | Views
"The city is not yet on fire" is the assurance we got from Edgars' FY 2011 results, as the group reiterated that they will be continuing with the aggressive new accounts growth.
Although management did note that disposable incomes have been reduced by personal loans, they remain confident that through their strict new account vetting process, reduced credit limits for the lower end customers and aggressive collection process they should be able to maintain their average handovers at historic lows averaging 0.5% (FY 2011: average handovers stood at 0.4% of lagged debtors). The group will thus maintain its 2% provisioning level based on actual bad debtors' levels as general provisioning at much higher levels is not tax efficient.
Revenue for the period went up by 47% to $53 million in line with management's guidance on the back of a steady growth in accounts, improved merchandise assortments and cost management as well as the rebranding of Express to Jet towards the end of the year. In terms of contribution to turnover, Edgars contributed 81%, Jet 14% and Carousel 5%. The trading profit thus grew by 77% to $7.5 million supported by improved profitability and the sale of higher value branded items at Edgars. Finance costs increased from $2.1 million to $2.8 million due to the effect of slower than anticipated growth in the last quarter as demand flattened due to delayed civil servants bonus payments. Borrowing costs have since fallen from 18.2% at the beginning of the year to 14.6% which should lower finance costs in FY 2012. The PBT for the period stood at $4.6 million whilst the attributable profit totalled $3.3 million .
Short term interest bearing loans and borrowings, fell from $15.7 million to $14.2 million whilst the group had $1.5 million in long term debt. The company's equity position in its debtors improved from $0.3 million for FY 2010 to $4.2 million . The cash generated from operations was $1.7 million improving by $12.8 million from the prior period while the closing cashflow position was $0.3 million (FY 2010: $0.1 million ).
Edgars chain recorded a 23% growth in unit sales as the number of accounts grew by 42.9% to 158,900 accounts whilst margins grew to 53.1% on the back of improved profitability and the sale of higher value branded items. Credit sales amounted to 76% while the active book stood at 81%. Customer spend on new accounts averaged $141.24 against $81.00 for existing accounts. For Express, unit sales increased by 16.4% from the prior year, while profitability grew by 194% with the expenses to sales ratio improving by 3.9% and margins up slightly to 42%. The manufacturing unit however registered a loss.
Although management did note that disposable incomes have been reduced by personal loans, they remain confident that through their strict new account vetting process, reduced credit limits for the lower end customers and aggressive collection process they should be able to maintain their average handovers at historic lows averaging 0.5% (FY 2011: average handovers stood at 0.4% of lagged debtors). The group will thus maintain its 2% provisioning level based on actual bad debtors' levels as general provisioning at much higher levels is not tax efficient.
Short term interest bearing loans and borrowings, fell from $15.7 million to $14.2 million whilst the group had $1.5 million in long term debt. The company's equity position in its debtors improved from $0.3 million for FY 2010 to $4.2 million . The cash generated from operations was $1.7 million improving by $12.8 million from the prior period while the closing cashflow position was $0.3 million (FY 2010: $0.1 million ).
Edgars chain recorded a 23% growth in unit sales as the number of accounts grew by 42.9% to 158,900 accounts whilst margins grew to 53.1% on the back of improved profitability and the sale of higher value branded items. Credit sales amounted to 76% while the active book stood at 81%. Customer spend on new accounts averaged $141.24 against $81.00 for existing accounts. For Express, unit sales increased by 16.4% from the prior year, while profitability grew by 194% with the expenses to sales ratio improving by 3.9% and margins up slightly to 42%. The manufacturing unit however registered a loss.
Source - Byo24News
