| Wed 19 Aug 2009, 13:55 | | TRU - Truworths International Limited - Preliminary Report On The Audited Group |
|
TRU
TRU
TRU - Truworths International Limited - Preliminary Report On The Audited Group
Results For The 52 Weeks Ended 28 June 2009
Truworths International Limited
(Registration number 1944/017491/06)
JSE Limited code: TRU
NSX code: TRW
ISIN: ZAE000028296
PRELIMINARY REPORT ON THE AUDITED GROUP RESULTS for the 52 weeks ended
28 June 2009
SALE OF MERCHANDISE UP 11% (13% excluding week 53 of prior period)
OPERATING PROFIT UP 12% (17% excluding week 53 of prior period)
OPERATING MARGIN REACHES 34%
HEADLINE EARNINGS PER SHARE UP 14% (19% excluding week 53 of prior period)
DILUTED HEADLINE EARNINGS PER SHARE UP 15% (19% excluding week 53 of prior
period)
DIVIDENDS FOR THE PERIOD UP 19%
GROUP PROFILE
Truworths International Limited is an investment holding, trading and
management company listed on the JSE Limited and the Namibian Stock Exchange.
Its trading subsidiaries, Truworths Limited and Young Designers Emporium (Pty)
Limited, are engaged in the retailing of fashion apparel and related
merchandise. Truworths International Limited and its subsidiaries (the Group)
operate primarily in southern Africa.
FINANCIAL PERFORMANCE
Retail trading conditions remained difficult and notwithstanding declining
interest rates, South African consumers remain under pressure. In this
challenging environment Group sale of merchandise for the 52 week trading
period to 28 June 2009 (the period) increased by 11% to R6 247 million.
After excluding the additional trading week in the prior period, sale of
merchandise increased by 13% inclusive of comparable store sales growth of 5%,
with product inflation averaging approximately 10%. Trading space increased by
12% over the prior period following the opening of 18 Truworths, 19 Identity,
10 Uzzi and 1 YDE store and the closure of 5 stores. At the end of the period
the Group had 495 stores (2008: 452).
The Group continued to record market share gains. Based on figures from the
retail liaison committee (RLC) for June 2009, the Group increased its
ladieswear RLC market share to 20.9% (2008: 20.6%) and menswear RLC market
share to 18.7% (2008: 18.2%).
% change % change
(including (excluding
2009 2008 week 53) week 53)
52 weeks 53 weeks on prior on prior
Rm Rm period period
Truworths Ladieswear 3 610 3 368 7 9
Truworths Menswear 1 220 1 092 12 14
Identity 821 685 20 23
Daniel Hechter 790 718 10 12
Retail sales 6 441 5 863 10 12
Franchise sales 38 34 12 15
Accounting
reclassifications (232) (246) (6) (6)
Sale of merchandise 6 247 5 651 11 13
YDE agency sales 246 241 2 4
The operating margin improved to 34% with operating profit increasing 12% to
R2 114 million. The gross margin has remained constant at 55%. Expenses grew by
11%, primarily as a result of increased occupancy and employment costs
attributable to the expansion in trading space.
Headline earnings per share were 337.6 cents, an increase of 14% (19% excluding
week 53 of the prior period) over the prior period`s 295.6 cents. This is in
line with the forecast range in the Group`s trading statement released on SENS
on 17 July 2009. Diluted headline earnings per share of 331.7 cents were 15%
higher (19% excluding week 53 of the prior period) than the 289.6 cents
achieved in 2008. A final cash dividend of 83 cents a share has been declared.
Total dividends for the period amount to 171 cents, 19% more than the prior
period. Dividend cover is 2.0 times headline earnings per share.
The Group statements of financial position continued to strengthen, with net
asset value per share increasing from 682 cents to 836 cents. The return on
equity at 44% was marginally below the targeted range owing to the increased
levels of cash being retained by the Group.
CREDIT MANAGEMENT
Net bad debt as a percentage of the debtors` book grew to 11.9% (2008: 11.3%)
in line with the interim results. Management remains satisfied with the quality
of the book and the level of doubtful debt allowance. The Group maintained a
qualifying payment percentage of 90% necessary for customers to avoid
delinquency.
During the period the Group continued to apply its normal credit granting
criteria resulting in an active account base growth of 3% to approximately
1.8 million accounts (16% five-year compound growth). The debtors` book grew by
11% during the period while Group credit sales represented 69% (2008: 70%) of
retail sales with 84% (2008: 84%) of active account holders able to purchase at
the end of the period.
CASH AND FINANCIAL POSITION
The Group remains in a healthy cash position, with cash and cash equivalents of
R767 million at the end of the period (2008: R533 million). During the period
the Group generated R569 million from operating activities and utilised cash to
fund share repurchases, expand distribution facilities and increase trading
space.
SHARE REPURCHASES
During the period 5 million shares were repurchased at an average price of
R29.04 per share for a total of R159 million. Since the inception of the share
buy-back programme in 2002, 73 million shares have been repurchased at an
average cost of R16.84 per share and a total cost of R1.2 billion. Forty-three
million of these shares (at an average cost of R10.95 per share and a total cost
of R475 million) have been cancelled. At the end of the period 30 million shares
(7% of total shares in issue) were held as treasury shares.
OUTLOOK
Retail sales for the first seven weeks of the 2010 financial period reflect
growth of 14% on the prior period.
The trading environment is expected to remain challenging for the balance of the
year and management will continue to focus on expense control, interventions to
manage the risk of credit and the consistent application of merchandising
strategies to manage the risk of fashion.
The board remains committed to investing appropriately for longer-term growth,
with trading space planned to increase by approximately 7% and the new
distribution facility being scheduled for completion in the second half of the
2010 financial period.
H Saven MS Mark
Chairman Chief Executive Officer
19 August 2009
FINAL DIVIDEND
The directors have resolved to declare a final cash dividend from retained
earnings in respect of the period ended 28 June 2009 in the amount of 83 cents
(2008: 72 cents) per share to holders of the company`s shares reflected in
the company`s register on the record date, being Friday, 11 September 2009.
The last day to trade in the company`s shares cum dividend is Friday,
4 September 2009. Trading in the company`s shares ex dividend will commence on
Monday, 7 September 2009. The dividend will be paid in South African Rand on
Monday, 14 September 2009. Consequently no dematerialisation or
rematerialisation of the company`s shares may take place over the period from
Monday, 7 September 2009 to Friday, 11 September 2009, both days inclusive.
In accordance with the company`s articles of association, the directors have
determined that dividends amounting to less than 1 000 cents due to any one
holder of the company`s shares held in certificated form will not be paid,
unless otherwise requested in writing, but aggregated with other such amounts
and donated to a charity to be nominated by the directors.
By order of the board
C Durham
Company Secretary
Cape Town
19 August 2009
GROUP STATEMENTS OF FINANCIAL POSITION
at 28 June at 29 June
2009 2008
Rm Rm
ASSETS
Non-current assets 927 848
Property, plant and equipment 618 527
Goodwill 90 90
Intangible assets 48 53
Derivative financial asset 25 16
Available-for-sale asset 1 -
Loans and receivables 97 99
Deferred tax 48 63
Current assets 3 579 3 055
Inventories 463 397
Trade and other receivables 2 281 2 077
Derivative financial asset 23 5
Prepayments 45 43
Cash and cash equivalents 767 533
Total assets 4 506 3 903
EQUITY AND LIABILITIES
Equity
Share capital and premium 65 50
Treasury shares (763) (604)
Retained earnings 4 208 3 457
Non-distributable reserves 41 17
Total equity 3 551 2 920
Non-current liabilities 94 85
Post-retirement medical benefit
obligation 32 28
Cash-settled compensation
obligation 14 7
Straight-line operating lease
obligation 48 50
Current liabilities 861 898
Trade and other payables 705 658
Derivative financial liability 18 -
Provisions 49 43
Tax payable 89 197
Total liabilities 955 983
Total equity and liabilities 4 506 3 903
Number of shares in issue (net of
treasury shares) (millions) 424.9 428.3
Net asset value per share (cents) 835.7 681.8
Key ratios
Return on equity (%) 44 48
Return on capital (%) 65 71
GROUP STATEMENTS OF COMPREHENSIVE INCOME
52 weeks 53 weeks
to 28 June to 29 June
2009 % 2008
Note Rm change Rm
Revenue 3 7 014 11 6 322
Sale of merchandise 6 247 11 5 651
Cost of sales (2 817) (2 568)
Gross profit 3 430 11 3 083
Other income 153 146
Trading expenses (2 083) 11 (1 874)
Depreciation and amortisation (109) (96)
Employment costs (672) (600)
Occupancy costs (496) (415)
Trade receivable costs (432) (464)
Other operating costs (374) (299)
Trading profit 1 500 11 1 355
Interest received 614 525
Profit before tax 2 114 12 1 880
Tax expense (680) (596)
Profit for the period 1 434 12 1 284
Profit for the period
attributable to:
Owners of the parent 1 434 12 1 277
Minority interest - 7
1 434 12 1 284
Other comprehensive income
Movement in effective portion of
cash flow hedge 14 (17)
Deferred tax on movement in
effective portion of
cash flow hedge (4) 5
Revaluation of available-for-sale
asset 1 -
Other comprehensive income for
the period, net of tax 11 (12)
Total comprehensive income
for the period 1 445 14 1 272
Total comprehensive income
attributable to:
Owners of the parent 1 445 14 1 265
Minority interest - 7
1 445 14 1 272
Basic earnings per share (cents) 337.2 14 295.6
Headline earnings per share (cents) 337.6 14 295.6
Fully diluted basic
earnings per share (cents) 331.3 14 289.6
Fully diluted headline
earnings per share (cents) 331.7 15 289.6
Weighted average number
of shares (millions) 425.3 432.0
Key ratios
Gross margin (%) 55 55
Trading expenses
to sale of merchandise (%) 33 33
Trading margin (%) 24 24
Operating margin (%) 34 33
GROUP STATEMENTS OF CASH FLOWS
52 weeks 53 weeks
to 28 June to 29 June
2009 2008
Rm Rm
CASH FLOWS FROM OPERATING ACTIVITIES
Cash flow from trading and cash
EBITDA* 1 661 1 474
Working capital movements (246) (104)
Cash generated from operations 1 415 1 370
Interest received 614 525
Tax paid (777) (595)
Cash inflow from operations 1 252 1 300
Dividends paid (683) (575)
Net cash from operating activities 569 725
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of plant and equipment
to maintain operations (31) (32)
Acquisition of property, plant and
equipment to expand operations (164) (129)
Acquisition of computer software (3) (5)
Proceeds on disposal of plant and equipment 1 -
Net investment in subsidiary - (35)
Minority interest loans acquired - (30)
Loans advanced (1) -
Loans repaid 7 10
Acquisition of cash-settled call options - (18)
Proceeds on disposal of cash-settled
call options 14 9
Settlement of cash-settled
compensation obligation (14) (9)
Net cash used in investing activities (191) (239)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on shares issued 15 14
Shares repurchased by subsidiaries (159) (183)
Net cash used in financing activities (144) (169)
Net increase in cash and cash
equivalents 234 317
Cash and cash equivalents at the
beginning of the period 533 216
Cash and cash equivalents at the end
of the period 767 533
Key ratios
Cash flow per share (cents) 294.4 300.9
Cash equivalent earnings per share (cents) 377.6 313.9
Cash realisation rate (%) 78 96
* Earnings before interest, tax, depreciation and amortisation
GROUP STATEMENTS OF CHANGES IN EQUITY
28 June 29 June
2009 2008
Rm Rm
Total equity at the beginning of the period 2 920 2 404
Total comprehensive income for the period 1 445 1 272
Dividends (683) (576)
Acquisition of minority interest in subsidiary - (17)
Premium on shares issued 15 14
Shares repurchased (159) (183)
Share-based payment 13 6
Total equity at the end of the period 3 551 2 920
Comprising:
Share capital and premium 65 50
Treasury shares (763) (604)
Retained earnings 4 208 3 457
Non-distributable reserves 41 17
Total equity 3 551 2 920
Cents per share:
Dividends 171 144
Final - payable September 83 72
Interim - paid March 88 72
SELECTED EXPLANATORY NOTES
1 BASIS OF PREPARATION
The information in this preliminary report has been extracted from the Group`s
2009 annual financial statements, which have been prepared in compliance with
International Financial Reporting Standards (IFRS) and the South African
Companies Act of 1973. This preliminary report has been prepared in accordance
with IFRS and IAS 34: Interim Financial Reporting.
The Group`s 2009 annual financial statements and this preliminary report have
been audited by the Group`s external auditors, Ernst & Young Inc., and their
unqualified audit opinion on such financial statements and on this preliminary
report are available for inspection at the company`s registered office.
The Group`s 2009 annual financial statements have been prepared in accordance
with the going concern and historical cost bases, except where otherwise
indicated in the Group`s accounting policies. The accounting policies have been
applied uniformly throughout the Group and are consistent with those applied in
the prior period, except as mentioned in note 2. The presentation currency of
the financial statements is the South African Rand (R) and all amounts are
rounded to the nearest million.
2 ACCOUNTING POLICIES
The accounting policies and methods of computation applied in the preparation
of the Group`s 2009 annual financial statements are consistent with those
applied in the preparation of the Group`s annual financial statements for the
period ended 29 June 2008, except for the following:
During the period, the Group adopted the following IFRS that is applicable to
its activities earlier than required by the standard, and such adoption did not
have any material effect on the financial performance or position of the Group:
IAS 1 (revised), `Presentation of Financial Statements`.
The standard affects the presentation of owner changes in equity and
comprehensive income. The Group income statement has been replaced by the Group
statement of comprehensive income.
In terms of the standard, all owner changes in equity are presented in the
Group statement of changes in equity, while all non-owner changes in equity are
presented under `other comprehensive income`, a component of the Group
statement of comprehensive income. In addition, the titles `balance sheet` and
`cash flow statement` are replaced by `statement of financial position` and
`statement of cash flows` respectively.
As a result, the disclosure changes are as follows:
- The movement in the effective portion of the cash flow hedge and the related
deferred tax are presented under other comprehensive income in the statement of
comprehensive income, whereas previously they were disclosed in the statement
of changes in equity.
- Similarly, the items above, together with profit for the period, are replaced
by total comprehensive income in the statement of changes in equity.
- Dividends per share amounts are presented in the statement of changes in
equity.
Whilst the presentation of certain comparative information has changed, there
has been no reclassification or restatement in the statements of financial
position. As a result, the Group has not presented an additional comparative
statement of financial position, as would be required under such circumstances.
Various other IFRS, amendments and International Financial Reporting
Interpretations Committee interpretations that have been issued and are
effective have not been adopted by the Group as they are not applicable to its
activities.
2009 2008 %
Rm Rm change
3 REVENUE
Sale of merchandise 6 247 5 651 11
Retail sales 6 209 5 617
Franchise sales 38 34
Interest received 614 525 17
Trade receivables 549 488
Investments 65 37
Other income 153 146 5
Commission 82 86
Display fees 29 26
Financial services income 23 19
Lease rental income 10 8
Royalties 3 2
Other 6 5
7 014 6 322 11
4 RECONCILIATION OF PROFIT FOR THE
PERIOD TO HEADLINE EARNINGS
Profit for the period attributable to owners
of the parent 1 434 1 277
Loss on disposal of fixed assets 2 -
Headline earnings 1 436 1 277 12
5 SEGMENT REPORTING
The Group`s reportable segments have been identified as the Truworths and YDE
business units. The Truworths business unit comprises the retailing activities
conducted by the Truworths ladieswear and menswear divisions, and its Identity,
Daniel Hechter and franchise departments, through which the Group retails
fashion apparel comprising clothing, footwear and other fashion products to
women, men and children. The YDE business unit comprises the agency activities
through which the Group retails clothing, footwear and related products on
behalf of emerging South African designers.
Management monitors the operating results of the business segments separately
for the purpose of making decisions about resources to be allocated and of
assessing performance. Segment performance is reported on an IFRS basis and
evaluated based on sales and operating profit or loss.
Truworths YDE Corporate# Group
Rm Rm Rm Rm
2009
Total revenue* 6 923 88 3 7 014
Third party 6 923 87 4 7 014
Inter-segment - 1 (1) -
Depreciation and
amortisation 106 3 - 109
Interest received 608 2 4 614
Profit for the period 1 404 27 3 1 434
Profit before tax 2 073 38 3 2 114
Tax expense (669) (11) - (680)
Segment assets** 6 495 101 (2 090) 4 506
Segment liabilities 1 022 12 (79) 955
Capital expenditure 196 2 - 198
Gross margin % 55 - - 55
Trading margin % 23 41 - 24
Operating margin % 33 44 - 34
Inventory turn times 6.1 - - 6.1
Credit:cash sales mix % 69:31 21:79 - 69:31
2008
Total revenue* 6 239 84 (1) 6 322
Third party 6 238 82 2 6 322
Inter-segment 1 2 (3) -
Depreciation and
amortisation 93 3 - 96
Interest received 521 2 2 525
Profit for the period 1 255 28 1 1 284
Profit before tax 1 839 39 2 1 880
Tax expense (584) (11) (1) (596)
Segment assets** 5 760 89 (1 946) 3 903
Segment liabilities 989 28 (34) 983
Capital expenditure 163 3 18 184
Gross margin % 55 - - 55
Trading margin % 23 43 - 24
Operating margin % 33 46 - 33
Inventory turn times 6.5 - - 6.5
Credit:cash sales mix % 70:30 21:79 - 70:30
* Segment revenue includes trade receivables interest and management fees
** Segment assets include trade and other receivables
# `Corporate` represents unallocated segments and consolidation entries
2009 2009 2008 2008
Third party revenue Rm % Rm %
South Africa 6 808 97.1 6 156 97.4
Namibia 121 1.7 95 1.5
Swaziland 47 0.7 37 0.6
Franchise sales 38 0.5 34 0.5
Botswana 15 0.2 15 0.2
Middle East 7 0.1 8 0.1
Rest of Africa 16 0.2 11 0.2
Total third party revenue 7 014 100 6 322 100
Non-current assets
South Africa 751 99.4 664 99.2
Namibia 4 0.5 5 0.7
Swaziland 1 0.1 1 0.1
Total non-current assets 756 100 670 100
Non-current assets represents property, plant and equipment, goodwill and
intangible assets
6 CAPITAL COMMITMENTS 2009 2008
Rm Rm
Capital expenditure authorised but not contracted:
Store development 150 145
Warehousing facilities 126 69
Computer infrastructure 27 31
Head office refurbishments 2 13
305 258
Capital expenditure authorised and contracted:
Land - 11
7 EVENTS AFTER THE END OF THE REPORTING PERIOD
No event, material to the understanding of this preliminary report, has
occurred between the end of the reporting period and the date of approval.
RESULTS ARE AVAILABLE ONLINE AT WWW.TRUWORTHS.CO.ZA
Truworths International Limited: (Registration number 1944/017491/06)
JSE Limited code: TRU NSX code: TRW ISIN: ZAE000028296
Registered office: No. 1 Mostert Street, Cape Town, 8001. PO Box 600,
Cape Town, 8000, South Africa
Sponsor in South Africa: Barnard Jacobs Mellet Corporate Finance (Pty) Limited
Sponsor in Namibia: Old Mutual Investment Services (Namibia) (Pty) Limited
Auditors: Ernst & Young Inc.
Transfer secretaries: Computershare Investor Services (Pty) Limited,
70 Marshall Street, Johannesburg 2001. PO Box 61051, Marshalltown 2107,
South Africa, or Transfer Secretaries (Pty) Limited, Shop 12, Kaiserkrone
Centre, Post Street Mall, Windhoek. PO Box 2401, Windhoek, Namibia
Company secretary: C Durham
Directors: H Saven (Chairman)#, MS Mark (CEO)*, RG Dow#, CT Ndlovu#,
SM Ngebulana#, AE Parfett#, QV Scorgie*, AJ Taylor* and MA Thompson#
* Executive Non-executive # Independent
Date: 19/08/2009 13:55:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
