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TDH
TDH
TDH - Tradehold Limited - Group results
Tradehold Limited
(Registration number: 1970/009054/06)
JSE share code: TDH
ISIN: ZAE000026902
Group results
For the year to 28 February 2007
Group income statement
AUDITED REVIEWED REVIEWED AUDITED
12 MONTHS 12 MONTHS 12 MONTHS 12 MONTHS
TO TO TO TO
28/02/06 28/02/07 28/02/07 28/02/06
GBP`000 GBP`000 R`000 R`000
268 562 280 082 REVENUE 3 725 236 3 083 323
7 021 (6 148) TRADING (LOSS)/PROFIT (70 636) 73 539
(6 145) (4 482) EXCEPTIONAL ITEMS (60 134) (68 093)
876 (10 630) OPERATING (LOSS)/PROFIT (130 770) 5 446
NET INTEREST
(PAID)/RECEIVED
875 (358) (4 469) 10 109
(LOSS)/PROFIT BEFORE
TAXATION
1 751 (10 988) (135 239) 15 555
(366) (351) TAXATION (3 574) (4 884)
(LOSS)/PROFIT AFTER
TAXATION
2 117 (10 637) (131 665) 20 439
ATTRIBUTABLE TO:
(1 058) (3 501) MINORITY INTEREST (42 900) (13 757)
RESULTING FROM NORMAL
ACTIVITIES
1 946 (2 642) (31 257) 19 713
RESULTING FROM EXCEPTIONAL
ITEMS
(3 004) (859) (11 643) (33 470)
3 175 (7 136) ORDINARY SHAREHOLDERS (88 765) 34 196
2 117 (10 637) (131 665) 20 439
PENCE PENCE EARNINGS PER SHARE CENTS CENTS
1,8 (1,2) - BEFORE EXCEPTIONAL ITEMS (13,9) 19,8
0,9 (2,1) - BASIC (25,6) 9,8
0,8 (1,7) - HEADLINE EARNINGS (20,4) 8,2
NUMBER OF SHARES FOR
CALCULATION OF EARNINGS
PER SHARE (`000)
347 330 347 330 347 330 347 330
GROUP BALANCE SHEET
AUDITED REVIEWED REVIEWED AUDITED
28/02/06 28/02/07 28/02/07 28/02/06
GBP`000 GBP`000 R`000 R`000
69 835 92 883 NON-CURRENT ASSETS 1 280 369 749 033
PROPERTY, PLANT AND
EQUIPMENT
45 288 38 581 540 918 485 752
20 885 42 601 INVESTMENT PROPERTIES 597 292 224 007
1 088 6 940 GOODWILL 75 403 11 670
1 156 2 205 INVESTMENTS - LOANS 30 920 12 395
1 418 2 556 DEFERRED TAXATION 35 836 15 209
95 945 71 785 CURRENT ASSETS 1 006 466 1 029 162
40 737 26 494 INVENTORIES 371 459 436 941
12 291 9 316 ACCOUNTS RECEIVABLE 130 612 131 895
42 917 35 975 CASH AND CASH EQUIVALENTS 504 395 460 326
165 780 164 668 TOTAL ASSETS 2 286 835 1 778 195
ORDINARY SHAREHOLDERS`
EQUITY
66 009 59 682 814 891 708 048
12 12 PREFERENCE SHARE CAPITAL 144 144
21 317 12 298 MINORITY INTEREST 172 420 228 643
32 816 40 085 NON-CURRENT LIABILITIES 562 015 351 984
17 264 24 281 LONG-TERM LOANS 340 436 185 175
75 416 DEFERRED TAXATION 5 832 804
OTHER NON-CURRENT
LIABILITIES
15 477 15 388 215 747 166 005
45 626 52 591 CURRENT LIABILITIES 737 365 489 376
214 4 422 SHORT-TERM LOANS 62 004 2 292
45 412 48 169 OTHER CURRENT LIABILITIES 675 361 487 084
TOTAL EQUITY AND
LIABILITIES
165 780 164 668 2 286 835 1 778 195
GROUP CASH FLOW STATEMENT
AUDITED REVIEWED REVIEWED AUDITED
12 MONTHS 12 MONTH 12 MONTHS 12 MONTHS
TO TO TO TO
28/02/06 28/02/07 28/02/07 28/02/06
GBP`000 GBP`000 R`000 R`000
11 127 17 075 CASH FLOW FROM OPERATIONS 279 754 114 604
DIVIDEND PAID TO MINORITY
SHAREHOLDERS
- (360) (4 766) -
CASH RETAINED FROM
OPERATIONS
11 127 16 715 274 988 114 604
(5 744) (34 882) INVESTMENT ACTIVITIES (445 892) (65 584)
NET ACQUISITION OF FIXED
ASSETS
(17 010) (20 670) (273 630) (192 688)
OTHER INVESTMENT
ACTIVITIES
11 266 (14 212) (172 262) 127 104
5 383 (18 167) NET CASH FLOW (170 904) 49 020
FINANCING ACTIVITIES - NET
DEBT RAISED
12 011 11 225 214 973 126 569
(DECREASE)/INCREASE IN
CASH AND CASH EQUIVALENTS
17 394 (6 942) 44 069 175 589
Group statement of changes in equity
Audited Reviewed Reviewed Audited
12 months 12 months 12 months 12 months
to to to to
28/02/06 28/02/07 28/02/07 28/02/06
GBP`000 GBP`000 R`000 R`000
62 459 66 009 Balance at 1 March 708 048 697 093
Financial instrument
adjustment on 1 March 2005
resulting from the
application of hedge
64 - accounting - 718
(73) 471 Exchange rate adjustments 191 136 (28 197)
282 657 Share-based payments 8 696 3 145
Hedging reserve
102 (319) adjustments (4 224) 1 093
Net (loss)/profit for the
3 175 (7 136) year (88 765) 34 196
66 009 59 682 814 891 708 048
Supplementary information
Audited Reviewed Reviewed Audited
12 months 12 months 12 months 12 months
to to to to
28/02/06 28/02/07 28/02/07 28/02/06
GBP`000 GBP`000 R`000 R`000
6 791 1. Depreciation for the
6 682 year 89 901 76 963
2. Capital expenditure for
22 004 24 114 the year 319 213 250 148
3. Calculation of headline
earnings
3 175 (7 136) Net (loss)/profit (88 765) 34 196
Attributable exceptional
1 640 3 125 items 42 739 18 351
Surplus on revaluation of
investment properties
after taxation and
(2 187) (1 785) minority interest (23 635) (24 370)
(Profit)/loss on sale and
scrapping of fixed assets
after taxation and
18 (84) minority interest (1 109) 207
2 646 (5 880) (70 770) 28 384
Audited Reviewed Reviewed Audited
28/02/06 28/02/07 28/02/07 28/02/06
4. Number of shares in
347 330 347 330 issue (`000) 347 330 347 330
5. Net asset value per
19,0 17,2 share (pence/cents) 234,6 203,9
1 050 4 261 6. Contingent liabilities 59 737 11 262
7. Operating lease
374 429 342 578 commitments 4 803 115 4 016 084
Analysis of results
Audited Reviewed Reviewed Audited
12 months 12 months 12 months 12 months
to to to to
28/02/06 28/02/07 28/02/07 28/02/06
GBP`000 GBP`000 R`000 R`000
Attributable earnings of
1 681 (5 873) Instore plc (70 721) 16 271
Other Tradehold Ltd group
4 635 1 703 companies 22 541 52 548
(Loss)/profit before
6 316 (4 170) exceptional items (48 180) 68 819
Attributable exceptional
(3 141) (2 966) items (40 585) (34 623)
3 175 (7 136) Net (loss)/profit (88 765) 34 196
Operating review
As predicted at the interim stage, Tradehold Limited has suffered a loss for the
full year to 28 February 2007. This was due to poor trading results reported by
Instore plc, the LSE listed discount retailer in which the company holds a 65%
controlling interest. The Instore losses resulted largely from extensive
corrective actions taken by its new senior management to refocus the business
and align the shopping experience and product offering with its target market.
Exceptional items flowing from these actions further impacted negatively on the
year`s results. Tradehold`s property interests, on the other hand, again grew
the size and value of its portfolio substantially through the acquisition of
astutely chosen quality buildings.
Instore plc
During the year Instore`s new management made fundamental changes to the
strategy, direction and operation of the company following an extensive review
of the business. This has had a major impact on its financial results for the
year to end February 2007.
The strategic review undertaken for this purpose focused on four key areas -
brand name, store format, store portfolio and the product offering of its two
chains, ...instore and Poundstretcher. A major decision flowing from this review
was to sharpen the group`s focus on the value convenience sector while
retaining, at least for the time being, both the current brands. However, all
future store development will focus on Poundstretcher, an upgraded store concept
which has elicited a favourable consumer response.
A detailed store review was undertaken in the light of the diversity of the
existing outlets in terms of size, location and condition. Those identified that
are either unprofitable or lack viability in the longer term will be disposed
of. In the light of these findings a start was made with a detailed programme to
refit and remodel the ones to be retained. This programme will be continued in
the new financial year.
The product offering was also extensively rationalised, with poorly performing
ranges eliminated and successful growth departments expanded. A structured
programme was launched to reduce the considerable quantities of aged, fragmented
and excess stock in the inventory. Clearing this excess stock necessitated
substantial markdowns which have had a material effect on gross profit and
overall profitability, a situation exacerbated by problems experienced with the
central warehouse`s new stock control system which has since been rectified.
Despite the actions taken, some old stock remains and clearing will continue in
the new financial year.
However, these steps did open the way for more targeted product selection and
improved merchandising disciplines while also radically improving cash flow
through lower inventory and increased stock turn. Inventory dropped from GBP40,7
million in 2006 to GBP26,5 million in the period under review.
Moorgarth Properties
Tradehold`s property interests are vested in several Moorgarth companies in
which it holds the controlling interest. During the review period the property
division continued to upgrade the quality of its holdings and to grow the
portfolio aggressively. In the two years since February 2005 it has trebled the
value of its holdings from GBP15,6 million to GBP45,0 million. Of the GBP29,4
million increase, GBP18,1 million was added in the past financial year.
The group started off in 2003 with 31 low-quality properties of which only eight
are left, and of these three are up for sale. Moorgarth`s main focus is on
commercial properties, retail space in particular, and, where mutually
beneficial, management works closely with Instore in identifying and providing
it with suitable space. During the period under review six new properties were
acquired for GBP19,2 million. It searches out properties with redevelopment
potential and for this purpose has established a project management company
called Bowcliffe LLP that operates as an independent profit centre in its field.
During the 2007 financial year Moorgarth produced a profit after tax of GBP2,04
million, primarily the increase in the valuation of the portfolio now undertaken
annually in terms of International Financial Reporting Standards (IFRS). This
compares with GBP3,7 million in 2006, the first year in which IFRS was applied
and which represented the cumulative increase in the portfolio since its
acquisition.
Notes to the results
Exceptional items
Store closure costs (GBP1,8
million)
Legal and professional expenditure (GBP1,0
million)
Impairment of fixed assets (GBP0,9
million)
Impairment of investments (GBP2,0
million)
Recovery of previous write-offs on
disposal of subsidiaries GBP0,6 million
Recovery of bad debt previously written off GBP0,6 million
Total (GBP4,5
million)
Contingent liabilities
At 28 February 2007 the Group had contingent liabilities of GBP4,3 million
(2006: GBP1 million). The major part is tax related. The Group accounts for
income tax based on advice from its external professional advisors. Based on
this advice the Group accrues for either a liability or includes the tax
exposure as part of contingent liabilities.
Dividend
The board does not propose a dividend in respect of the financial year to 28
February 2007.
Outlook
In the case of Instore, the year under review was one of refocusing its brands
and retail format, reducing stock levels and instituting basic disciplines while
at the same time strengthening the senior management team. Although the profit
performance was disappointing, cash flow was significantly improved and Instore
provided with a solid foundation for future growth. Much still needs to be done,
but as a board we believe the changes introduced during the year are turning
Instore into an increasingly effective competitor in its chosen sector of the UK
retail market. This view is confirmed by sales figures recorded since year-end.
As far as Tradehold`s investment in Moorgarth is concerned, this division is
developing into a substantial and independent contributor to group profits.
Accounting policy
Accounting policies comply with IFRS which have been applied consistently in
line with those adopted for the year ended 28 February 2006.
The group`s auditors, PricewaterhouseCoopers Inc, reviewed the results and their
unqualified review report is available on request from the company secretary.
Reporting currency
As the operations of Tradehold`s subsidiaries are conducted in pound sterling
and because of the distortion caused by the fluctuating value of the rand, the
company is reporting its results in the former currency. Rand equivalents are
provided to comply with regulatory requirements.
C Moore HRW Troskie
Director Director
Luxemburg 21 May 2007
Date: 21/05/2007 17:01:01 Produced by the JSE SENS Department.
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