| Wed 21 Feb 2001, 0:00 | | Tradehold Ltd - Profit Announcement |
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TRADEHOLD LIMITED
INTERIM PROFIT ANNOUNCEMENT FOR THE SIX MONTHS TO 31 DECEMBER 2000
TRADEHOLD WAS FORMED AS PART OF THE RESTRUCTURING AND UNBUNDLING OF PEPKOR
LIMITED, APPROVED BY SHAREHOLDERS ON 31 OCTOBER LAST YEAR. IN TERMS OF THE
RESTRUCTURING, A NEW COMPANY, TRADEHOLD, WAS ESTABLISHED AND PEPKOR'S STAKE OF
69% IN THE BRITISH SUBSIDIARY, BROWN & JACKSON PLC, WAS TRANSFERRED TO THE NEW
COMPANY. SUBSEQUENTLY, THE SHARES IN TRADEHOLD WERE DISTRIBUTED TO PEPKOR'S
SHAREHOLDERS. THE COMPANY WAS LISTED ON THE JSE SECURITIES EXCHANGE SOUTH
AFRICA ON 6 NOVEMBER 2000.
CURRENTLY THE STAKE IN BROWN & JACKSON IS TRADEHOLD'S MAIN ASSET. BROWN &
JACKSON, LISTED ON THE LONDON STOCK EXCHANGE, OWNS FOUR RETAIL CHAINS, ALL OF
WHICH ARE FOCUSED ON THE CASH DISCOUNT MARKET. AT THE END OF THE PERIOD UNDER
REVIEW THESE CHAINS - POUNDSTRETCHER, YOUR MORE STORE, WHAT EVERYONE WANTS AND
THE FAMOUS BRUNSWICK WAREHOUSE - TOGETHER OPERATED 711 OUTLETS IN THE UNITED
KINGDOM (UK) AND POLAND.
COMPARATIVE FIGURES
THE COMPARATIVE PRO FORMA FIGURES IN THE INCOME STATEMENT FOR THE SIX MONTHS
ENDED 31 DECEMBER 1999 AND THE YEAR ENDED 30 JUNE 2000 AND IN THE BALANCE SHEET
ON 30 JUNE 2000 HAVE BEEN PREPARED ON THE BASIS THAT THE GROUP EXISTED IN ITS
PRESENT FORM FOR THOSE PERIODS. THE COMPARATIVE PRO FORMA FIGURES FOR THE YEAR
ENDED 30 JUNE 2000 ARE BASED ON PEPKOR'S AUDITED ANNUAL FINANCIAL STATEMENTS.
NO PRO FORMA COMPARATIVE FIGURES FOR THE SIX MONTHS ENDED 31 DECEMBER 1999 ARE
INCLUDED IN THE CASH FLOW STATEMENT AND THE STATEMENT OF CHANGES IN
SHAREHOLDERS' FUNDS, AS TRADEHOLD WAS ESTABLISHED AS A NEW GROUP WITH EFFECT
FROM 1 JULY 2000.
ACCOUNTING POLICIES
THE INTERIM REPORT HAS BEEN PREPARED IN ACCORDANCE WITH STATEMENT AC 127:
INTERIM FINANCIAL REPORTING AND THE FOURTH SCHEDULE TO THE SOUTH AFRICAN
COMPANIES ACT. THE ACCOUNTING POLICIES ARE IN ALL MATERIAL RESPECTS IN
ACCORDANCE WITH THOSE ADOPTED BY PEPKOR IN THE FINANCIAL STATEMENTS FOR THE
YEAR ENDED 30 JUNE 2000.
OPERATIONAL REVIEW
ALTHOUGH BROWN & JACKSON SUCCEEDED IN INCREASING TURNOVER BY ALMOST 10% DURING
THE PERIOD UNDER REVIEW, OPERATING PROFIT CAME UNDER PRESSURE FOR A VARIETY OF
REASONS. THESE WERE MAINLY THE UK'S PRESENT TOUGH TRADING CLIMATE, COSTS
INVOLVED IN RAPIDLY INCREASING THE NUMBER OF OUTLETS, AND THE EXPLOITATION OF
EXISTING AND NEW MARKETS, AMONG OTHERS POLAND, WHERE THE GROUP NOW OPERATES 14
STORES.
IN THE SIX MONTHS TO 31 DECEMBER, 74 NEW STORES WERE OPENED. THE INCREASE IN
TURNOVER IS DUE MAINLY TO THE CONTRIBUTIONS MADE BY THESE STORES, AS LIKE FOR
LIKE SALES DECLINED BY 7,5%.
IN SPITE OF THE PRESSURE ON OPERATING PROFIT, IT WAS DECIDED TO CONTINUE WITH
THE EXPANSION PROGRAMME TO DERIVE MAXIMUM BENEFIT FROM THE OPPORTUNITIES
PRESENTED BY THE CURRENT STRONG GROWTH IN THE DISCOUNT MARKET. ALTHOUGH THE
GROUP IS REPRESENTED THROUGHOUT THE UK, THERE STILL IS POTENTIAL FOR EXPANSION,
ESPECIALLY IN THE SOUTH.
POUNDSTRETCHER: THIS IS THE LARGEST CHAIN IN THE GROUP, THE MAIN CONTRIBUTOR
TO GROUP PROFIT AND THE VEHICLE USED TO EXPAND INTO POLAND. DURING THE PERIOD
UNDER REVIEW THIS CHAIN OPENED 25 NEW STORES AND CLOSED TWO, BRINGING THE TOTAL
NUMBER IN OPERATION TO 321. ALTHOUGH TURNOVER INCREASED 1,8%, OPERATING PROFIT
DROPPED 22,8%. THE EXPANSION INTO POLAND IS STILL AT AN EXPERIMENTAL STAGE AND
THIS VENTURE WILL TAKE QUITE SOME TIME TO BECOME PROFITABLE. ONCE ITS HAS
FIRMLY TAKEN ROOT, HOWEVER, POLAND COULD BECOME THE SPRINGBOARD FOR EXPANSION
INTO OTHER EASTERN EUROPEAN COUNTRIES.
YOUR MORE STORE: AT THE END OF THE PERIOD UNDER REVIEW THIS CHAIN OPERATED
194 SMALL-FORMAT STORES, MOST OF THEM LOCATED IN SCOTLAND AND THE NORTH OF
ENGLAND. OPERATING PROFIT DROPPED 45,1%, WITH LIKE FOR LIKE SALES FALLING 7,9%.
WHAT EVERYONE WANTS: ALTHOUGH THIS CHAIN SHOWED A 3,1% SALES INCREASE,
OPERATING PROFIT TUMBLED 74,4%, MAINLY BECAUSE OF INCREASED MARKETING
EXPENDITURE AND PRESSURE ON MARGINS. THIRTEEN NEW STORES WERE OPENED DURING THE
PERIOD UNDER REVIEW, AND MANY OF THE EXISTING STORES ARE CURRENTLY BEING
UPGRADED IN APPEARANCE AND LAYOUT.
THE FAMOUS BRUNSWICK WAREHOUSE: THIS CHAIN, WHICH SELLS MAINLY SPORTSWEAR AND
SPORTS FOOTWEAR, WAS ACQUIRED ABOUT A YEAR AGO. THE NUMBER OF BRANCHES HAS
SINCE INCREASED FROM 37 TO 55, AND IT IS THE INTENTION TO MAINTAIN A RAPID RATE
OF EXPANSION. THIS CHAIN, WHOSE MERCHANDISE REPRESENTS AN IMPORTANT EXPANSION
OF THE PRODUCTS OFFERED BY THE GROUP, IS EXPECTED TO MAKE AN EVER INCREASING
CONTRIBUTION TO GROUP PROFIT IN THE FUTURE.
DURING THE PERIOD UNDER REVIEW BROWN & JACKSON UNDERTOOK COMPREHENSIVE MARKET
RESEARCH AMONG CONSUMERS ON ITS CHAINS. THIS RESEARCH HAS ALREADY BEEN
EVALUATED AND SOME OF THE RECOMMENDATIONS RELATING MAINLY TO THE PRODUCT MIX,
AN IMPROVED SALES ENVIRONMENT AND AN UPGRADING OF SERVICE LEVELS, ARE ALREADY
BEING IMPLEMENTED.
NEW CAPITAL
IN TERMS OF PEPKOR'S RESTRUCTURING AND UNBUNDLING TRADEHOLD TOOK OVER SOUTH
AFRICAN DEBT OF R500 MILLION AS WELL AS FOREIGN CASH ASSETS OF APPROXIMATELY
#53 MILLION.
IN THE PRELISTING STATEMENT PUBLISHED ON 6 NOVEMBER 2000 IT WAS STATED THAT THE
DIRECTORS WERE CONSIDERING PROPOSALS FOR REDEEMING THIS SOUTH AFRICAN DEBT FROM
THE PROCEEDS OF A RIGHTS ISSUE.
THE DIRECTORS HAVE NOW DECIDED TO OBTAIN APPROXIMATELY R550 MILLION FOR THIS
PURPOSE BY WAY OF A RIGHTS ISSUE OF NEW TRADEHOLD SHARES. FULL PARTICULARS OF
THE RIGHTS ISSUE WILL BE PUBLISHED IN DUE COURSE IN ACCORDANCE WITH THE LISTING
REQUIREMENTS OF THE JSE SECURITIES EXCHANGE SOUTH AFRICA.
PROSPECTS
RETAIL TRADE CONDITIONS IN THE UK ARE NOT EXPECTED TO SHOW MUCH IMPROVEMENT BY
YEAR-END. THE COMPANY BELIEVES, HOWEVER, THAT IT HAS THE RETAIL FORMATS WITH
WHICH IT CAN EFFECTIVELY FACE THE CHALLENGES PRESENTED BY THE MARKET AND,
CONSEQUENTLY, THAT BUSINESS WILL IMPROVE IN THE SECOND HALF. DURING THE FIRST
FIVE WEEKS OF THIS PERIOD TURNOVER INCREASED 12,1%, WHILE LIKE FOR LIKE SALES
DECREASED JUST 2,2%.
EXPERIENCE HAS SHOWN THAT BROWN & JACKSON, LIKE MANY OTHER RETAIL BUSINESSES IN
THE UK, GENERATES VIRTUALLY ITS ENTIRE PROFIT FOR THE YEAR DURING THE SIX
MONTHS TO THE END OF DECEMBER. CONSEQUENTLY, THE PROFIT FOR THE 12 MONTHS TO
THE END OF JUNE 2001 IS NOT EXPECTED TO BE SIGNIFICANTLY HIGHER THAN THAT FOR
THE FIRST SIX MONTHS.
DECLARATION OF DIVIDEND
IN PURSUANCE OF BROWN & JACKSON'S POLICY, THE BOARD HAS DECIDED TO DECLARE A
DIVIDEND AFTER THE YEAR-END ONLY.
BY ORDER OF THE BOARD
CH WIESE C MOORE
CHAIRMAN DIRECTOR
21 FEBRUARY 2001
TRADEHOLD LIMITED
(REGISTRATION NUMBER 1970/009054/06)
36 STELLENBERG ROAD, PAROW INDUSTRIA 7490
PO BOX 6100, PAROW EAST 7501
CONSOLIDATED INCOME STATEMENT
UNAUDITED
UNAUDITED 6 MONTHS 12 MONTHS
6 MONTH TO 31/12/99 CHANGE TO 30/06/00
(R'000) TO 31/12/00 PRO FORMA % PRO FORMA
TURNOVER 2 657 067 2 234 598 19 4 043 373
OPERATING PROFIT 233 887 314 388 (26) 353 680
NET INTEREST PAID 13 525 22 181 (39) 49 066
PROFIT BEFORE
EXCEPTIONAL ITEMS 220 362 292 207 (25) 304 614
EXCEPTIONAL ITEMS 6 676 - 7 789
PROFIT BEFORE TAXATION 227 038 292 207 (22) 312 403
TAXATION 57 523 67 458 (15) 72 347
PROFIT AFTER TAXATION 169 515 224 749 (25) 240 056
OUTSIDE SHAREHOLDERS'
INTEREST 53 969 72 971 (26) 77 462
ATTRIBUTABLE TO NORMAL
ACTIVITIES 51 629 72 971 81 032
ATTRIBUTABLE TO
EXCEPTIONAL ITEMS 2 340 - (3 570)
NET PROFIT 115 546 151 778 (24) 162 594
EARNINGS PER
SHARE (CENTS)
- BEFORE EXCEPTIONAL
ITEMS 100,2 136,8 (27) 136,3
- AFTER EXCEPTIONAL
ITEMS 104,1 136,8 (24) 146,5
- HEADLINE EARNINGS 102,7 136,1 (25) 133,8
NUMBER OF SHARES FOR
CALCULATION OF EARNINGS
PER SHARE ('000) 110 968 110 968 110 968
CONSOLIDATED BALANCE SHEET
UNAUDITED 30/06/00
(R'000) 31/12/00 PRO FORMA
NON-CURRENT ASSETS 1 011 275 889 200
FIXED ASSETS 947 562 785 683
INVESTMENTS 63 713 103 517
CURRENT ASSETS 1 851 870 899 937
INVENTORIES 877 622 684 200
ACCOUNTS RECEIVABLE 230 302 121 173
BANK BALANCES AND CASH 743 946 94 564
TOTAL ASSETS 2 863 145 1 789 137
ORDINARY SHAREHOLDERS' FUNDS 667 306 459 603
PREFERENCE SHARE CAPITAL 46 -
OUTSIDE SHAREHOLDERS' INTEREST 261 115 187 873
NON-CURRENT LIABILITIES 89 915 87 435
LONG-TERM LOANS - 1 295
OTHER NON-CURRENT LIABILITIES 89 915 86 140
CURRENT LIABILITIES 1 844 763 1 054 226
SHORT-TERM LOANS AND BANK OVERDRAFTS 676 772 307 740
OTHER CURRENT LIABILITIES 1 167 991 746 486
TOTAL EQUITY AND LIABILITIES 2 863 145 1 789 137
ANALYSIS OF NET PROFIT
UNAUDITED
UNAUDITED 6 MONTHS
6 MONTHS TO 31/12/99
(R'000) TO 31/12/00 PRO FORMA
ATTRIBUTABLE EARNINGS FROM
BROWN & JACKSON PLC 112 965 168 430
NET OPERATING (COSTS)/INCOME
OF TRADEHOLD LTD (334) 1 580
NET INTEREST PAID BY TRADEHOLD LTD (1 421) (18 232)
PROFIT BEFORE EXCEPTIONAL ITEMS 111 210 151 778
ATTRIBUTABLE EXCEPTIONAL ITEMS 4 336 -
NET PROFIT 115 546 151 778
CONSOLIDATED CASH FLOW STATEMENT
UNAUDITED
6 MONTHS TO
(R'000) 31/12/00
CASH FLOW FROM OPERATIONS 423 335
DIVIDENDS PAID (19 241)
CASH RETAINED FROM OPERATIONS 404 094
INVESTMENT ACTIVITIES (122 495)
NET ACQUISITION OF FIXED ASSETS (146 810)
OTHER INVESTMENT ACTIVITIES 24 315
NET CASH FLOW 281 599
FINANCING ACTIVITIES 367 783
PROCEEDS FROM SHARE ISSUE 46
NET DEBT RAISED 367 737
INCREASE IN BANK BALANCES AND CASH 649 382
SUPPLEMENTARY INFORMATION
UNAUDITED
UNAUDITED 6 MONTHS TO
6 MONTHS TO 31/12/99
(R'000) 31/12/00 PRO FORMA
1. DEPRECIATION FOR THE PERIOD 55 502 43 330
2. CAPITAL EXPENDITURE FOR THE PERIOD 149 930 68 449
3. CALCULATION OF HEADLINE EARNINGS
NET PROFIT 115 546 151 778
ATTRIBUTABLE EXCEPTIONAL ITEMS (4 336) -
LOSS/(PROFIT) ON SALE AND SCRAPPING
OF FIXED ASSETS AFTER TAXATION AND
OUTSIDE SHAREHOLDERS' INTEREST 2 706 (784)
113 916 150 994
UNAUDITED 30/06/00
31/12/00 PRO FORMA
4. NUMBER OF SHARES IN ISSUE ('000) 110 968 110 968
5. NET ASSET VALUE PER SHARE (CENTS) 601,3 414,2
6. INVESTMENTS
LISTED INVESTMENTS AT COST
LESS AMOUNTS WRITTEN OFF 32 845 55 024
UNLISTED INVESTMENTS AT COST
AND DIRECTORS' VALUATION 26 048 44 214
LOANS 4 820 4 279
63 713 103 517
LISTED INVESTMENTS AT MARKET VALUE 32 845 55 024
7. CAPITAL COMMITMENTS 26 829 26 875
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' FUNDS
UNAUDITED
6 MONTHS TO
(R'000) 31/12/00
BALANCE AT 1 JULY 2000 459 603
UNBUNDLING ADJUSTMENTS 30 329
EXCHANGE RATE ADJUSTMENTS 63 024
SHARE ISSUE COSTS (1 196)
NET PROFIT FOR THE PERIOD 115 546
BALANCE AT 31 DECEMBER 2000 667 306
TRADEHOLD ANNOUNCES BIG RIGHTS ISSUE
PRESS RELEASE
Tradehold, which today reported an operating profit of R234m for the first six
months of its existence, announced at the same time a rights issue to raise
R550m..
Flowing from Pepkor's restructuring at the end of last year, Tradehold was
created with, as its main asset, the group's 69% stake in the listed British
retail company Brown & Jackson plc. The latter consists of four retail chains -
Poundstretcher, Your More Store, What Everyone Wants and The Famous Brunswick
Warehouse - which, at the end of December, together operated 711 branches in
the UK and Poland.
As part of the restructuring Tradehold also took over local debt of about R500m
while at the same time acquiring foreign cash assets of GBP53m. Tradehold
chairman Dr Christo Wiese said the income from the rights issue
would be used to redeem the local debt.
The issuing of new Tradehold shares was envisaged in the company's prelisting
statement in November last year. Full particulars will be announced shortly.
Commenting on Tradehold's results for the six months Wiese said although
turnover had increased by 19% to R2,66bn, operating profit had declined by 26%
compared with the corresponding period, for which the company furnished pro
forma figures as Tradehold only came into existence on 1 July 2000.
He said the main reasons for the decrease in operating profit were the tough
retail climate in the UK, the cost involved in Brown & Jackson's opening of 74
new stores in the period under review, and the company's entry into the Polish
retail market.
Tradehold's profit before tax and exceptional items came to R220m while net
profit stood at R116m. Headline earnings were 102,7c per share, 25% lower than
in the corresponding period. Following the example of Brown & Jackson,
Tradehold's board decided to declare a dividend only at the year-end.
Wiese said at this stage Tradehold's results were virtually solely dependent on
Brown & Jackson's performance. "The latter's performance was not as strong as
we expected. I believe, however, that it has the right retail formats to be
able to compete successfully in the British retail market.
"In addition, we are at present implementing a number of strategic improvements
in the business which, we believe, will have a positive effect on Brown &
Jackson's operating results.
"Notwithstanding the cost involved, we are also continuing with the rapid
expansion programme in all four chains in order to derive the maximum benefit
from the current strong growth in the British discount market. I have no doubt
that in future we shall reap the benefit of this decision."
Wiese said although trading conditions in the UK were still difficult, he
believed that Tradehold would do well in the second half of the year.
Ends
ISSUED BY De Kock & Kerkhoff Communication Consultants
ON BEHALF OF Tradehold
DATE OF ISSUE Tuesday, 20 February 2001
MEDIA ENQUIRIES Christo Wiese, chairman (021) 933 5137
Cornus Moore, director (021) 933 5137
Ben de Kock, DeK&K (021) 424 5280
Pippa Hooper
De Kock & Kerkhoff Communication Consultants
Tel +27 21 424 5280
Fax +27 21 424 5290
Cell 082 859 7740
E-mail pippa@dkk.co.za mailto:pippa@dkk.co.za
www.dkk.co.za
