| Wed 30 May 2012, 15:24 | | TDH - Tradehold Limited - Audited results for the |
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TDH
TDH
TDH - Tradehold Limited - Audited results for the 12 months to 29 February 2012
and withdrawal of cautionary announcement
TRADEHOLD LIMITED
(Registration number: 1970/009054/06)
("Tradehold" or "the group")
Incorporated in the Republic of South Africa
JSE Share code: TDH ISIN:ZAE000152658
AUDITED RESULTS FOR THE 12 MONTHS TO 29 FEBRUARY 2012 AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
Tradehold Limited is an investment holding company listed on the Main Board of
the JSE. It has no operating assets in South Africa. Its business consists of an
85% interest in the property owning Moorgarth group of companies, an indirect
holding of 15,9% in the variety retail group Instore and 71% of Reward, an asset
backed, short-term lending business. All these businesses are UK-based. By far
the largest investment is in Moorgarth which manages a GBP46,6 million portfolio
of unencumbered retail, commercial and industrial buildings.
In a year in which trading conditions remained extremely difficult, Tradehold
recorded a trading profit of GBP1,2 million (2011: GBP6,1 million). However,
after exceptional items and interest paid a loss of GBP2,8 million was incurred
(2011: a profit of GBP2,0 million). Moorgarth suffered a net loss of GBP0,6
million before tax for the year against a profit of GBP4,8 million in 2011. This
was primarily due to valuation write-downs of GBP0,9 million on the property
portfolio (2011: valuation gains of GBP5,4 million). Reward, in its first full
year of trading, reported an operating profit of GBP343 000.
Tradehold`s auditors, PricewaterhouseCoopers Inc, audited the summarised
financial statements and their unqualified report is available for inspection at
Tradehold`s registered office.
BUSINESS ENVIRONMENT
The British economy continued on the edge of a double-dip recession, growing
well below 1 per cent during 2011. Consumer spending remained at a low ebb,
stifled by Government`s austerity measures to reduce the national debt. Efforts
to stimulate the economy, assisted by the Bank of England`s "quantitative
easing", did little to improve economic conditions. Interest remained at the
lowest level in years while the growth in inflation outpaced that in average
earnings. In the first months of 2012 the economy seemed to gain some momentum
but trading conditions remained extremely difficult.
Moorgarth
Despite the negative macro-economic climate, Moorgarth experienced the strongest
increase in tenant interest in four years. In the light of this change in market
sentiment, management continued its effort to reduce the amount of empty space
in the 22 buildings in the portfolio. As a result a number of new lettings and
lease restructurings were concluded. Implementing its philosophy of managing its
portfolio dynamically, the retail park in Wisbech was sold for GBP25,3 million
in a transaction that realised a capital gain of GBP10,3 million (recognised in
prior years as a valuation adjustment).
Having repaid all external debt in the course of the year and realised
significant capital profits during that time, the group is now actively
negotiating on new real estate opportunities as well as realising the innate
asset management potential of a number of its existing properties. In June 2011
it acquired the St Catherine`s Retail Park in Perth, Scotland, for GBP12 million
and negotiations are well underway for the refurbishment and extension of this
site.
Management are in detailed discussions on a number of significant property
investments as well as joint-venture arrangements that could transform the
company`s size and business profile. These investments are mainly in the retail,
food store and office sectors across the UK.
Reward
Tradehold indirectly owns 71% in two partnerships, Reward Capital LLP, which
makes short-term, asset-backed loans to small and medium sized enterprises and
Reward Commercial Finance LLP, which provides invoice discounting facilities to
similar businesses. During its first full year of operation the business
recorded an operating profit of GBP343 000. In the final 2 months of trading
there was a surge in investment activity as the new management team became fully
operational. The outlook for this coming year is extremely exciting and
significant growth in the portfolio size is expected.
COMMENTS ON THE RESULTS
Exceptional items
Exceptional items are made up as follows:
(GBP`million) 2012 2011
Fair value adjustment: UBS AG investment (2,2) 2,0
Fair value adjustment: Abbeycrest plc shares (0,1) -
Legal costs (0,5) (1,6)
Provision for lease repair liabilities - (2,9)
Recovery of lease guarantee payments - 0,6
Impairment of loans - (0,2)
Total (2,8) (2,1)
Contingent liabilities
Tradehold reported a contingent liability of GBP5.4m in the 2011 reporting
period. This related to an assessment raised by the South African Revenue
Service (SARS) in respect of Capital Gains Tax (CGT) imposed pursuant to
Tradehold ceasing to be a resident of South Africa for tax purposes in the 2003
tax year. Tradehold successfully appealed against this assessment to the Tax
Court during 2010. SARS appealed to the Supreme Court of Appeal (SCA) and on 8
May 2012, the SCA handed down its judgement dismissing SARS` appeal.
Rights issue
The GBP59 million rights issue was successfully completed in May 2011. This
enabled the group to repay all its property loans by February 2012. At year-end
its only debt was a short-term loan of CHF9,5 million (GBP6,6 million) while it
had cash resources of GBP39 million.
DIVIDEND
In the light of the group`s results for the year the board does not recommend
paying a dividend to shareholders.
OUTLOOK
With its access to considerable cash resources and no external debt, Moorgarth
is well placed to benefit from opportunities that arise in a highly depressed
real estate market, whether it is the acquisition of new properties with strong
up-side potential or the upgrading of existing ones to attract high-level
tenants. Indeed, the group is considering a number of real estate investments.
Moorgarth has the financial capability to acquire assets in the current market
that should result in positive growth in future years.
Reward is a business with considerable potential but it is still at an early
stage of development and it will be some time before it will make a meaningful
contribution to group profits. However, it is offering a product that is
currently in very high demand and consequently it remains in a position where it
can be very selective on investments and tailor its pricing structure
accordingly.
This general forecast has not been reviewed nor reported on by Tradehold`s
auditors.
ACCOUNTING POLICY
The results for the 12 months to 29 February 2012 have been prepared in
accordance with the recognition and measurement principles of International
Financial Reporting Standards (IFRS) and the AC 500 Standards as issued by the
Accounting Practices Board, including IAS 34: Interim Financial Reporting, and
in accordance with the requirements of the South African Companies Act, Act 71
of 2008, as amended, and the Listings Requirements of the JSE Limited. The
accounting policies are consistent with those applied in the annual financial
statements for the year ended 28 February 2011, except as set out below.
During the period Tradehold adopted the following revised accounting standards:
* IFRS 7: Financial Instruments - Disclosures (amendments resulting from May
2010 Annual Improvements to IFRS);
* IAS 1: Presentation of Financial Statements (amendments resulting from May
2010 Annual Improvements to IFRS);
* IAS 24: Related Party Disclosures (revised definition of related parties);
* IAS 34: Interim Financial Reporting (amendments resulting from May 2010 Annual
Improvements to IFRS).
The adoption of these standards has had no significant effect on these results.
These results have been prepared under the supervision of the financial
director, Mr C Moore.
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.
CH Wiese C Moore
Chairman Director
Malta
28 May 2012
Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
12 months to 12 months to
(GBP`000) 29/02/12 28/02/11
Revenue 6 645 5 929
Trading profit 1 207 6 110
Exceptional items (2 761) (2 112)
Operating (loss)/profit (1 554) 3 998
Interest received 390 216
Interest paid (1 558) (2 281)
(Loss)/profit before taxation (2 722) 1 933
Taxation 124 (15)
(Loss)/profit for the year (2 846) 1 948
Other comprehensive income
Currency translation differences (14) (11)
Total comprehensive (loss)/income for the year (2 860) 1 937
(Loss)/profit attributable to:
Owners of the parent (2 493) 1 220
Non-controlling interest (353) 728
(2 846) 1 948
Total comprehensive (loss)/income attributable to:
Owners of the parent (2 507) 1 209
Non-controlling interest (353) 728
(2 860) 1 937
(Loss)/earnings per share (pence): basic and diluted
- before exceptional items 0,2 9,6
- basic (2,1) 3,5
- headline loss (2,1) (9,7)
Number of shares for calculation of earnings
per share (`000) 118 841 34 654
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(GBP`000) 29/02/12 28/02/11
Non-current assets 47 247 57 530
Property, plant and equipment 5 737 6 126
Investment properties 41 498 51 385
Financial assets 12 19
Current assets 52 025 20 874
Financial assets 7 403 9 762
Trade and other receivables 5 601 2 054
Inventories 24 29
Cash and cash equivalents 38 997 9 029
Total assets 99 272 78 404
Equity 87 213 31 349
Ordinary shareholders` equity 86 838 30 304
Non-controlling interest 375 1 045
Non-current liabilities 56 7 855
Preference share capital 51 12
Deferred taxation 5 -
Long-term borrowings - 7 843
Current liabilities 12 003 39 200
Short-term borrowings 6 601 33 707
Other current liabilities 5 402 5 493
Total equity and liabilities 99 272 78 404
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
12 months to 12 months to
(GBP`000) 29/02/12 28/02/11
Cash flows from operating activities (3 874) (1 582)
Cash flows from investing activities 10 028 (293)
Acquisition of investment properties (15 073) (82)
Acquisition of property, plant and equipment (233) (57)
Proceeds on disposal of investment properties 25 253 -
Proceeds on disposal of property, plant and equipment - 6
Other investment activities 81 (160)
Net cash flow 6 154 (1 875)
Cash flows from financing activities 23 814 315
Proceeds from borrowings 317 3 467
Proceeds from ordinary share issue 58 856 -
Proceeds from preference share issue 39 -
Repayment of borrowings (35 266) (3 128)
Purchase of treasury shares (89) -
Transactions with non-controlling shareholders (43) (24)
Net increase/(decrease) in cash and cash equivalents 29 968 (1 560)
Cash and cash equivalents at beginning of the year 9 029 10 589
Cash and cash equivalents at end of the year 38 997 9 029
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
12 months to 12 months to
(GBP`000) 29/02/12 28/02/11
Balance at beginning of the year 31 349 29 436
Proceeds from ordinary share issue 58 856 -
Transactions with non-controlling shareholders (43) (24)
Purchase of treasury shares (89) -
Total comprehensive (loss)/income for the year (2 860) 1 937
Balance at end of the year 87 213 31 349
NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS
12 months to 12 months to
(GBP`000) 29/02/12 28/02/11
1. Depreciation for the year 392 403
2. Capital expenditure for the year 15 306 139
3. Calculation of headline loss
Net (loss)/profit (2 493) 1 220
Shortfall/(surplus) on revaluation of
investment properties 630 (5 804)
Profit on sale and scrapping of property,
plant and equipment and investment properties (923) (6)
Impairment of property, plant and equipment 230 428
Taxation - -
Non-controlling interest 9 806
(2 547) (3 356)
Audited Audited
(GBP`000) 29/02/12 28/02/11
4. Number of shares in issue
(net of treasury shares) (`000) 138 296 34 654
5. Net asset value per share (pence) 62,8 87,4
6. Financial assets
Listed investments at fair value 5 591 7 832
Unlisted investments at fair value 1 812 1 812
Loans 12 137
7 415 9 781
7. Contingent liabilities - 5 428
SEGMENTAL ANALYSIS
Trading Total
(GBP`000) Revenue profit/(loss) assets
Twelve months to 29 February 2012
Property - retail 2 879 3 176 30 475
- commercial 358 87 7 367
- offices 722 40 4 425
- leisure 2 686 (447) 6 546
- other - 367 5 813
Treasury - (2 016) 44 646
6 645 1 207 99 272
Twelve months to 28 February 2011
Property - retail 2 361 9 316 38 634
- commercial 268 (972) 7 283
- offices 542 (397) 5 545
- leisure 2 708 (31) 7 376
- other 50 3 1 831
Treasury - (1 809) 17 735
5 929 6 110 78 404
There was no intersegment revenue, resulting in all revenue being received from
external customers.
EVENTS AFTER THE REPORTING PERIOD
No material events have occurred between the end of the financial year and the
date of these results that would have a material effect on the financial
statements.
In compliance with Section 3.22 of the JSE Limited Listings Requirements
shareholders are advised that the Integrated Annual Report was posted to
shareholders today and contains no modification to these published annual
financial results.
NOTICE OF ANNUAL GENERAL MEETING
The Annual General Meeting of the shareholders of Tradehold, will be held at the
head office of Pepkor Limited, 36 Stellenberg Road, Parow Industria, 7493 on
Monday, 6 August 2012 at 09:30, to transact the business as stated in the notice
of Annual General Meeting forming part of the Integrated Annual Report.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Tradehold shareholders ("Shareholders") are referred to the cautionary
announcement released on SENS on 2 February 2012 which was renewed on 15 March
2012 and 3 May 2012, respectively whereby they were advised that Tradehold was
considering a transaction which, if successfully concluded, may have a material
effect on the price of Tradehold`s securities. Shareholders are advised that
Tradehold is not proceeding with the transaction and therefore caution is no
longer required to be exercised by Shareholders when dealing in Tradehold`s
securities.
30 May 2012
Date: 30/05/2012 15:00:02 Produced by the JSE SENS Department.
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