Cape Town – Direct marketing group, HomeChoice Holdings, increased earnings per share by 34.7% to 237.4 cents for the year to December 2011, driven by continued strong customer demand for both HomeChoice merchandise and FinChoice financial services.
The group today also confirmed it plans to list on the JSE in the second half of 2012, market conditions permitting.
Group revenue increased by 29% to exceed R1 billion for the first time and totalled R1.12 billion. The retail business grew revenue by 26% to R939 million while FinChoice lifted revenue by 49% off a lower base to R182 million.
Operating margin improved from 28.7% to 30.5%, resulting in a 37% increase in operating profit to R342 million.
Distributions to shareholders increased by 70% to 85 cents per share.
HomeChoice Holdings chairman, Rick Garratt, said the growth was achieved in a challenging but improving retail environment, impacted by the fluctuating exchange rate and cotton price increases. ” Our customer base, the mass market urban female, continues to benefit from urbanisation, income growth, rising living standards and improving aspirations,” he said.
HomeChoice retail CEO, Shirley Maltz, said consumers remained cautious and value driven in their spending. ” In this environment, we continued to leverage our merchandise strategy of offering customers innovative products that represent value, quality and exclusivity.”
” We attracted 116 000 new customers and the level of customer loyalty is reflected in the repurchase rate increasing from 65.1% to 65.5%, with sales per customer growing by 15%.”
” The direct marketing model remains HomeChoice’s core strength and continues to differentiate us in the market, offering customers a shopping experience that suits their lifestyle and time constraints,” said Maltz.
The financial services business, FinChoice, increased loan disbursements by 51% to R490 million, with repeat loans representing 71% of total loans disbursed. Operating margin rose from 47.1% to 51.2% as a result of the stable cost base, leveraging of the HomeChoice retail marketing engine and management of bad debt.
” The unsecured credit market continued its unprecedented high growth since the National Credit Act came into force in June 2007 and we were suitably cautious in this market context during the year,” said FinChoice CEO, Sean Wibberley.
” Our strategy of sourcing new customers from the filtered of credit-proven HomeChoice retail customers remains a key strength of our business model. We continued to manage personal loans demand to repayment terms of 24 months or less to contain long-term risk exposure and to focus on building our base of customers for future growth opportunities.”
Group receivables increased by 38% to R750 million, with HomeChoice 29% higher at R421 million and FinChoice up 43% to R297 million.
Garratt said the group’ s credit books remain healthy. ” Provisions against both the HomeChoice and FinChoice books decreased slightly, and cash collections were in line with expectations in HomeChoice and ahead of forecast in FinChoice.”
The group’ s financial position remains strong, with the net asset value increasing by 25% to 830 cents per share. Cash generated from operations before working capital changes increased by 25% to R347 million. At year end the group held R46 million in cash and cash equivalents.
Discussing the proposed listing, Garratt said the capital raised will enable the group to fund continued expansion and maintain the strong growth in FinChoice.
” In addition, capital will be used to fund longer terms to creditworthy HomeChoice retail customers and enable us to broaden the product range. A listing will also improve incentives for management and staff by making their shares readily tradeable, and assist in attracting and retaining talented people,” he said.
On the outlook for the year ahead, HomeChoice expects reasonable revenue growth and will focus on attracting a slightly higher proportion of new customers.
Credit risk strategies will be maintained at current levels. Revenue in FinChoice is expected to continue to grow strongly, although not at the same high levels as 2011. Both HomeChoice and FinChoice have experienced steady growth in demand for the first 12 weeks of the new financial year.
Issued by Tier 1 Investor Relations on behalf of HomeChoice Holdings
For further information, kindly contact
Sue Hemp / Graeme Lillie
Tier 1 Investor Relations
Tel 021 702 3102