Fin24

Connection performs incredibly

2005-04-12 13:01

Johannesburg - IT solutions and retail group Connection Holdings on Tuesday reported a 50.7% increase in headline earnings per share to 52.44c for the six months ended February 28 2005 from 34.79c for the corresponding period a year ago.

In line with current practice, the group declared no interim dividend.

The group, which consists of two operating divisions - Incredible Connection and Photo Connection - reported a 35.8% rise in revenue to R496.5m, while net profit for the period was up 45.4% to R17.04m.

The group said in a statement that Incredible Connection performed exceptionally well during the period while Photo Connection delivered a solid performance, given the short period of time that it has been part of the group.

The group experienced buoyant conditions in the retail market during the review period and saw significant volume growth across all categories especially notebooks and personal computers, digital photography, gaming and multimedia.

Incredible Connection continued to benefit from very buoyant consumer demand with turnover up 25% and operating profit before interest and tax up 36%.

One new store was opened in Somerset West in Cape Town, while two stores were relocated, one at the Foreshore in Cape Town, while the Hillfox store in Johannesburg was moved to Clearwater Mall.

Incredible Connection currently has 34 retail outlets.

With effect from November 2004, the Group acquired 12 photographic outlets from Beyond iT (Pty) Ltd, in order to bolster its presence in the digital photographic sector of the IT retail market.

The Group currently has a total of 28 photographic stores countrywide.

"We are currently busy with the integration of Beyond iT into the group. This will involve a change of the trading name to "Photo Connection" as well as the introduction of an extended range, the upgrading of the IT system, the consolidation of the operating standards across the entire division as well as the transfer of operational responsibility to a reconstituted management team.

"Good progress has so far been made in these integration initiatives," it said.

Within the short time since the acquisition, the Photo Connection division generated an operating profit before interest of R3.6m on R37.7m of turnover.

Looking ahead, the Connection Group expects trading conditions to remain positive over the next six months, assuming exchange rates and interest rates remain stable over this period.

"We anticipate good organic growth with strong demand arising from the increase in computer literacy in Southern Africa, coupled with strong replacement demand."

Accordingly, the group expects to show "appreciable earnings growth" for the financial year to August 31 2005, it concluded.

I-Net Bridge (Business)