| Thu 15 Feb 2001, 0:00 | | Truworths International Limited - Interim Results |
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Truworths International Limited
Interim results for the 26 weeks ended 31 December 2000
Continuing operation highlights
* Operating profit increased by 20,1%
* Headline earnings per share up 17,7%
* Growth in sales of 12,1%
* Dividend per share increased by 16,7%
* Sound cash position further improved
Total operation highlights
* Operating profit increased by 32,3%
Comment
* Group results
Following earlier indications of better performance when compared with the
corresponding period in the previous financial year, the board is pleased to
report that group headline earnings from continuing operations grew by 17,7% to
22,6 cents per share for the six months ended 31 December 2000. This resulted
from further improvement in the core Truworths business where highly accurate
reading of the fashion market by the buying and support teams, together with
well implemented company growth strategies, are meeting with encouraging
success.
For all operations the increase in headline earnings per share was a
significant 48,7% over the figure for the period to December 1999, during which
the Australian subsidiary, Sportsgirl, was placed under voluntary
administration following on-going losses. The administrators made a first
distribution to creditors of Au$4,1 million on 14 September 2000 of which group
subsidiaries received Au$1,7 million (R7, 2 million), which has been recorded
as an exceptional item.
The group's sound cash position was further enhanced in the period under
review, with net bank and cash balances increasing by R66 million to R216, 9
million.
* Truworths results
Truworths countered the challenges of a sluggish economy, lower inflation and
changing patterns in consumer spending through concentrating on core
competencies of focusing and developing unique retail formulae, extending new
initiatives and implementing strategies to manage expenses.
Merchandise sales were up 12,1% to R823,3 million and trading, notably in
November and especially in December, when sales grew 18,7%, was ahead of
expectations. The new "millenium" fashion emporium opened at Menlyn Park in
Pretoria enjoyed excellent customer reaction and made an encouraging
contribution.
The performance of Identity continued to be most promising. This concept was
introduced last year in a pilot phase of 13 stand-alone stores to meet the
demand for fashion at extremely good prices and to launch our cash retailing
strategy.
Identity's expansion by the end of this financial year to 21 stores, offering a
focused range of menswear and womenswear, is on schedule.
Headline earnings improved by 19,6% to R103,4 million. There was a 20,1%
increase in operating profit - from R124,8 million to R149,8 million. Operating
profit before interest and taxation as a percentage of revenue increased from
16,2% last year to 17,5% as a result of increased market share and improved
productivity in terms of sales per square metre and per full time employee.
Cost management measures, including a tougher approach to delinquent credit,
proved effective. Arrears as a percentage of the total book were reduced,
recoveries improved and collections were satisfactory.
* Prospects
It is expected that South African retailers will continue to grapple with
highly competitive and challenging market conditions for the remainder of this
financial year. Nevertheless, the positive trend in sales has continued in
January with sales growth of approximately 12% and management anticipates a
reasonable growth in profits over the previous year, provided the success of
growth strategies for additional stores, format development, new initiatives
and cost containment prevails. One of the new initiatives - offering personal
loans to selected account holders - is being undertaken on a pilot basis
through Truworths Financial Services (Pty) Ltd. The partner in this joint
venture is Woolworths Financial Services. The loan book will be funded off
balance sheet initially and it is anticipated that Truworths will not have
material exposure to bad debt.
* Wooltru unbundling
The board has been consulted by Wooltru on its strategy to unbundle its
holdings in Truworths International Ltd and other listed group subsidiaries to
its shareholders. The board has been advised that there are a number of
processes that have to be completed before an unbundling can take place.
Shareholders will be kept informed of developments.
Abridged balance sheet
Unaudited Audited
26 weeks ended 52 weeks ended
31-Dec 30-Jun
2000 1999 2000
R'000 R'000 R'000
Assets
Non-current assets
Property, plant and equipment 132 824 131 651 122 894
Investments and loans 193 291 213 853 195 430
Current assets
Inventories 126 137 125 164 123 702
Accounts receivable 560 957 551 935 523 185
Bank and cash 216 870 264 006 150 904
1 230 079 1 286 609 1 116 115
Equity and liabilities
Ordinary shareholders'
interest 824 040 686 951 734 569
Outside shareholders' interest - 389 219
Total shareholders' equity 824 040 687 340 734 788
Interest bearing liabilities - 171 169 -
Interest-free liabilities 406 039 428 100 381 327
1 230 079 1 286 609 1 116 115
Number of shares
in issue (000's) 459 828 451 138 457 709
Net asset value
per share (cents) 179,2 152,3 160,5
Abridged income statement
Unaudited Audited
26 weeks ended 52 weeks ended
31-Dec 30-Jun
2000 1999 Change 2000
R'000 R'000 % R'000
Revenue 857 593 1 056 672 1 772 888
Continuing operations 857 593 770 606 11,3 1 486 811
Discontinuing operations - 286 066 286 077
Cost of sales (403 134) (497 176) (811 999)
Gross profit 454 459 559 496 960 889
Continuing operations 454 459 411 070 810 775
Discontinuing operations - 48 426 150 114
Total operating expenses (304 639) (446 278) (733 346)
Operating profit before
interest and taxation 149 820 113 218 32,3 227 543
Continuing operations 149 820 124 780 20,1 241 279
Discontinuing operations - (11 562) (13 736)
Interest paid (129) (7 284) (8 087)
Operating profit before
exceptional items 149 691 105 934 219 456
Exceptional items 7 222 (112 461) (157 428)
Net profit/(loss) before
taxation 156 913 (6 527) 62 028
Taxation (46 219) (37 411) (71 464)
Net profit/(loss)
after taxation 110 694 (43 938) (9 436)
Outside shareholders' interest
in (profit)/loss (30) (42) 11
Net profit/(loss) attributable
to ordinary shareholders 110 664 (43 980) (9 425)
Headline earnings per share
All operations (cents) 22,6 15,2 48,7 32,8
Continuing operations(cents) 22,6 19,2 17,7 37,3
Diluted headline earnings
per share
All operations (cents) 22,3 14,9 49,7 32,2
Continuing operations (cents) 22,3 18,9 18,0 36,6
Earnings per share (cents) 24,2 (9,8) (2,1)
Diluted earnings per
share (cents) 23,9 (9,6) (2,0)
Dividend per share (cents) 7,0 6,0 16,7 12,5
Weighted average
number of shares (000's) 458 087 449 065 451 546
Abridged cash flow
Unaudited Audited
26 weeks ended 52 weeks ended
31-Dec 30-Jun
2000 1999 2000
R'000 R'000 R'000
Cash inflow from operations 89 038 108 512 178 467
Net cash outflow from investing
activities (30 326) (50 857) (54 703)
Net cash inflow/(outflow)
from financing activities 1 285 (1 879) (4 609)
Net increase in cash and
cash equivalents 59 997 55 776 119 155
Net cash inflow/(outflow) on
discontinuance 7 222 (76 024) (76 893)
Cash and cash equivalents at beginning
of the period 166 400 113 089 124 138
Cash and cash equivalents
at end of the period 233 619 92 841 166 400
Bank and cash 216 870 264 006 150 904
Interest bearing liabilities - (171 165) -
Effect of translation changes 16 749 - 15 496
Abridged statement of changes in equity
Unaudited Audited
26 weeks ended 52 weeks ended
31-Dec 30-Jun
2000 1999 2000
R'000 R'000 R'000
Ordinary shareholders' interest at
beginning of year 734 569 746 587 746 587
Net profit/(loss) attributable
to ordinary shareholders 110 664 (43 980) (9 425)
Distributions to shareholders (21 999) (15 705) (15 705)
Losses on transactions with outside
shareholders - - (2 242)
Reversal of translation reserve in
discontinuing operations - - 13 567
Transfer (to)/from
non-distributable reserves (479) 184 -
Share capital and share
premium movements 1 285 (135) 1 787
Ordinary shareholders'
interest at end of the period 824 040 686 951 734 569
Basis of preparation
The information contained in this announcement constitutes an extract of
salient information contained in the group's interim report for the period to
31 December 2000. The said interim report, which complies with the requirements
of AC 127, the Southern African Statement of Generally Accepted Accounting
Practice on interim financial reporting, is about to be mailed to shareholders.
Accounting policies
The interim report on which this announcement has been based was prepared on
the historical cost basis and in accordance with the accounting policies which
were applied in the preparation of the group's latest annual financial
statements for the year ended 30 June 2000.
Unaudited Audited
26 weeks ended 52 weeks ended
31-Dec 30-Jun
2000 1999 Change 2000
R'000 R'000 % R'000
Revenue
Sale of merchandise 823 298 1 020 489 1 702 426
Continuing operations 823 298 734 717 12,1 1 416 654
Discontinuing operations - 285 772 285 772
Interest received 27 692 30 050 55 968
Investments 5 483 7 915 11 187
Accounts receivable 22 209 22 135 44 781
Dividends received 3 809 5 615 9 421
Royalties and management fees 2 794 518 5 073
857 593 1 056 672 1 772 888
Reconciliation of
headline earnings
Net profit/(loss) attributable
to ordinary shareholders 110 664 (43 980) (9 425)
Exceptional items (7 222) 112 461 157 428
Profit on sale of fixed assets (77) (229) (66)
Headline earnings 103 365 68 252 51,4 147 937
Continuing operations 103 365 86 398 19,6 168 257
Discontinuing operations - (18 146) (20 320)
Interim dividend
The directors have resolved to declare a dividend in respect of the six months
ended 31 December 2000 in the amount of 7,0 (1999: 6,0) cents per share, to
members registered as such at the close of business on Friday 2 March 2001.
The dividend will be paid in the currency of the Republic of South Africa on
Monday 26 March 2001 when dividend cheques will be posted, or alternatively
dividends due will be transferred electronically to the bank accounts of those
members who have requested payment in such manner.
Truworths International Limited
(Registration number 1944/017491/06)
SRG House, 1 Mostert Street, Cape Town 8001
PO Box 600, Cape Town 8000
Auditors: Ernst & Young
Directors: MS Mark (Chairman and CEO), RG Dow*, BD Lapin*, CT Ndlovu*, AE
Parfett*, LA Tager* and AJ Taylor * Non-executive
Company secretary: C Durham
Transfer secretaries:
Mercantile Registrars Limited
10th Floor, 11 Diagonal Street, Johannesburg 2001
PO Box 7184, Johannesburg 2000 (South Africa)
Transfer Secretaries (Pty) Limited. PO Box 2401, Windhoek
Shop 12, Kaiserkrone Centre, Post Street Mall, Windhoek (Namibia)
The interim report will be available shortly on our website at
www.truworths.co.za
GROWTH PLANS PAY OFF AS TRUWORTHS LIFTS EARNINGS 17,7%
Successful growth strategies helped fashion retailer Truworths International
Ltd to lift group headline earnings from continuing operations by 17,7% from
19,2 cents to 22,6 cents a share for the six months to December.
Executive chairman Michael Mark said today the increase resulted from further
improvement in the core Truworths business where highly accurate reading of the
fashion market by the buying and support teams, and the strategies for
additional stores, format development, new initiatives and cost containment had
helped boost sales and operating profit.
Headline earnings for all operations increased by 48,7 % from 15,2 cents a
share reported for the first half of the last financial year, when the
loss-making Australian subsidiary, Sportsgirl, was placed under voluntary
administration.
The interim results released today reflected an exceptional item of R7,2
million (Au$1,7 million) which group subsidiaries received as part of the first
distribution to creditors by Sportsgirl's administrators. They also reflected
a R66 million increase to R216,9 million in the group's cash position.
An improved interim dividend of 7c (6c) was declared.
Mark said Truworths had overcome the challenges of a sluggish economy, lower
inflation and changing patterns in consumer spending and recorded merchandise
sales of R823,3 million - a 12,1% increase.
"Trading, notably in November and especially in December, when sales grew
18,7%, was ahead of expectations. The 'new millennium' Truworths fashion
emporium opened at Menlyn Park in Pretoria enjoyed excellent customer reaction
and made an encouraging contribution. "
He said Truworths' headline earnings improved by 19,6% to R103,4 million. There
was a 20,1% increase in operating profit - from R124,8 million to R149, 8
million. Operating profit before interest and taxation as a percentage of
revenue rose from 16,2 % last year to 17,5% as a result of increased market
share and improved productivity in terms of sales per square metre and per full
time employee.
Cost management measures, including a tougher approach to delinquent credit,
proved effective. Arrears as a percentage of the total book were reduced,
recoveries improved and collections were satisfactory.
Mark said the performance of the Identity cash chain, which was launched last
year in a pilot phase of 13 stand-alone stores, continued to be most promising.
"Identity's expansion by the end of this financial year to 21 stores, offering
a focused range of menswear and womenswear, is on schedule."
He said that Truworths, along with other South African retailers, would
continue to grapple with highly competitive and challenging market conditions
for the remainder of the financial year.
"We do anticipate reasonable growth in profits over the previous year provided
our growth strategies keep on working as well as they are. The positive trend
in sales continued in January, with sales growth of some 12%."
He said one of the new initiatives - offering personal loans to selected
account holders - was being undertaken on a pilot basis through Truworths
Financial Services (Pty) Ltd, a joint venture company with Woolworths Financial
Services. The loan book would be funded off balance sheet initially and it was
anticipated that Truworths would not have material exposure to bad debt.
ends
ISSUED FOR Truworths International Ltd
BY DE Kock & Kerkhoff Communication Consultants
INQUIRIES Michael Mark 021-460-7910
Wayne van der Merwe 021-460-7955
Chris Durham 021-460-7502
Mike Kerkhoff 021-424-5280
