| Fri 17 Aug 2001, 0:00 | | Tradehold Limited - Profit Announcement For The Ye |
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Tradehold Limited
Profit announcement for the year ended 30 June 2001
"Total sales for the first six weeks of the new year increased by 11% while
like-for-like sales are up 1%. Stock levels are under control, profit
margins are maintained and the group is confident that it will achieve
profit growth."
Christo Wiese, chairman
Tradehold came into existence in its present form as part of the
restructuring and attendant unbundling of Pepkor Limited, approved by
shareholders on 31 October 2000. 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 entity.
Subsequently, the shares in Tradehold were distributed to Pepkor
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.
COMPARATIVE FIGURES
The comparative pro forma figures in the income statement for the 12 months
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 that
period and are based on Pepkor's audited annual financial statements.
No pro forma comparative figures for the 12 months ended 30 June 2000 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 annual financial statements have been prepared on the historical cost
basis in accordance with South African Statements of Generally Accepted
Accounting Practice. The accounting policies are in all material respects
consistent with those adopted by Pepkor in the annual financial statements
for the year ended 30 June 2000.
OPERATIONAL REVIEW of brown & jackson plc
Although the group's sales performance for the second half of the year ended
30 June 2001 was better than for the first half, its results for the full
reporting period is still significantly down compared to the corresponding
twelve months. Total turnover increased by 8,1%, mainly as a result of new
store openings. However, like-for-like sales which exclude new store
contributions, decreased by 5,9% for the year. Although disappointing, it
still is an improvement on the decrease of 7,5% in like-for-like sales at
the half-year stage.
Operating profit before interest, gain on investment, amortisation and
taxation, dropped from 34,5 million to 12,6 million, mainly as a result of
increased competition in the market sector Brown & Jackson operates in; the
group's programme of rapid expansion that saw 107 new store openings during
the period under review; and the opening of a new distribution centre for
Poundstretcher that holds many long-term benefits but had a considerable
short-term cost impact.
At 30 June 2001 the group operated 734 stores, 718 in the UK and 16 in
Poland. During the same time 16 non-profitable stores were closed. Although
the group has a presence throughout the UK, stores are concentrated in the
Midlands, the north of England and Scotland, allowing considerable
opportunities for expansion, particularly in the south. The group therefore
will continue its expansion programme, but at a slower rate. It expects to
open 60 stores during the new financial year.
Poundstretcher: With 325 stores, it is by far the largest of the four
operating chains and the only contributor to group operating profit during
the reporting year. Although sales increased by 2,5%, operating profit
decreased by 36,8% compared to the corresponding period. During the past
financial year 35 new stores were opened and 8 unprofitable ones closed. A
new distribution centre was opened to improve delivery. To increase
profitability, the chain is aggressively controlling costs, strengthening
middle management to improve service levels, creating a more appealing
shopping environment and increasing its spending on advertising.
Your More Store: While total sales increased by 1,5%, like-for-like sales
were down 4,7%. The company reported an operating loss. At year-end the
chain was trading from 200 stores. The expansion programme has been slowed
down drastically to allow management to restore the chain's profitability.
Costs and stock are managed stringently, with a renewed focus on improving
the chain's price competitiveness.
What Everyone Wants: This chain, with a decrease of 7,1% in like-for-like
sales, also recorded an operating loss. Its total number of stores increased
by 18 to 133, and the chain's programme of store refurbishments, continues.
Following management changes, buying procedures were reviewed and new
product ranges, including jewellery, introduced. Management is confident
that these actions will improve sales later in the year. The chain's pricing
and marketing strategy, as well as its cost structure were also reviewed.
The Famous Brunswick Warehouse: Total sales grew by 39,7% while the
number of stores increased by 21 to 60. The business did not perform to
expectations during the reporting year and an operating loss was recorded. A
new managing director was appointed with effect from 1 June 2001. The chain
will continue with its expansion programme as management is optimistic about
the contribution it can make to group profit.
Poland: The group is trading from 16 stores in Poland. A new supply chain
strategy that will increase profit margins, is under consideration. As with
any new venture, it will take time before the Polish operation shows a
profit.
RIGHTS ISSUE
In terms of Pepkor's restructuring and unbundling, Tradehold effectively
took over South African debt of R500 million in November 2000. In the
Prelisting Statement published on 6 November 2000 it was stated that the
directors were considering proposals for redeeming the above mentioned debt
from the proceeds of a rights issue. The board has now decided to proceed
with the rights issue after it had been announced earlier in the year but
was then delayed. Further particulars of the rights issue will be published
shortly, in accordance with the Listing Requirements of the JSE Securities
Exchange South Africa.
PROSPECTS
Tradehold's prospects are determined by the growth Brown & Jackson
anticipates for its operations. Brown & Jackson reports that trading in
Poundstretcher and Your More Store has improved in the second half of the
year under review. However, What Everyone Wants and The Famous Brunswick
Warehouse are not yet experiencing a similar improvement.
Management is addressing the problems at these two chains and various
programmes have been implemented to improve their results. Although trading
conditions in their market sector are not easy, it is expected that both
chains will react favourably to the changes.
Total sales for the first six weeks of the new year increased by 11% while
like-for-like sales are up 1%. Stock levels are under control, profit
margins are maintained and the group is confident that it will achieve
profit growth. Although Brown & Jackson experienced a difficult year,
management is confident that the group will, in future, show sustained
profit growth.
DECLARATION OF DIVIDEND
Notice is hereby given that the board has declared a final dividend of 10
cents per ordinary share in respect of the twelve months ended 30 June 2001.
The dividend will be paid on Monday, 10 September 2001.
To comply with the procedures of STRATE, the last day to trade in the shares
for purposes of entitlement to the final dividend is Friday, 31 August 2001.
The shares will commence trading ex dividend on Monday, 3 September 2001 and
the record date is Friday, 7 September 2001.
The last date to register for purposes of certificated shareholders is
Friday, 7 September 2001. Certificated shareholders may not dematerialise
their shares between Friday, 24 August 2001 and Friday, 7 September 2001.
By order of the Board
C H Wiese C Moore
Chairman Director
16 August 2001
Consolidated income statement
Pro forma
12 months 12 months Change
(R'000) to 30/6/2001 to 30/6/2000 %
Turnover 4 756 234 4 043 373 18
Operating profit 134 957 353 680 (62)
Net interest paid 39 202 49 066 (20)
Profit before exceptional items 95 755 304 614 (69)
Exceptional items 14 697 7 789
Profit before taxation 110 452 312 403 (65)
Taxation 13 765 72 347 (81)
Profit after taxation 96 687 240 056 (60)
Outside shareholders' interest 37 080 77 462 (52)
Attributable to normal activities 32 167 81 032
Attributable to exceptional items 4 913 (3 570)
Net profit 59 607 162 594 (63)
Earnings per share (cents)
- before exceptional items 44,9 136,3 (67)
- after exceptional items 53,7 146,5 (63)
- headline earnings 48,6 133,8 (64)
Dividend (cents per share) 10,0 -
Dividend cover - before exceptional
items (times) 4,5 -
Number of shares for calculation of
earnings per share ('000) 110 968 110 968
Consolidated balance sheet
Pro forma
(R'000) 30/6/2001 30/6/2000
Non-current assets 967 986 889 200
Fixed assets 937 569 785 683
Investments 30 417 103 517
Current assets 1 599 424 899 937
Inventories 878 872 684 200
Accounts receivable 171 926 121 173
Bank balances and cash 548 626 94 564
Total assets 2 567 410 1 789 137
Ordinary shareholders' funds 605 621 459 603
Preference share capital 46 -
Outside shareholders' interest 242 199 187 873
Non-current liabilities 113 397 87 435
Long-term loans 625 1 295
Deferred taxation 6 326 -
Other non-current liabilities 106 446 86 140
Current liabilities 1 606 147 1 054 226
Short-term loans and bank overdrafts 824 871 307 740
Other current liabilities 781 276 746 486
Total shareholders' funds and liabilities 2 567 410 1 789 137
Analysis of net profit
Pro forma
12 months 12 months
(R'000) to 30/6/2001 to 30/6/2000
Attributable earnings from Brown & Jackson plc 70 377 184 538
Net operating (costs)/income of Tradehold Ltd (4 474) 2 969
Net interest and taxation paid by Tradehold Ltd (16 080) (36 272)
Profit before exceptional items 49 823 151 235
Attributable exceptional items 9 784 11 359
Net profit 59 607 162 594
Consolidated cash flow statement
12 months
(R'000) to 30/6/2001
Cash flow from operations 62 091
Dividends paid (19 241)
Cash retained from operations 42 850
Investment activities (105 421)
Net acquisition of fixed assets (208 282)
Other investment activities 102 861
Net cash flow (62 571)
Financing activities 516 633
Proceeds from share issue 172
Net debt raised 516 461
Increase in bank balances and cash 454 062
Supplementary information
Pro forma
12 months 12 months
(R'000) to 30/6/2001 to 30/6/2000
1. Depreciation for the year 120 475 93 297
2. Exceptional items
Profit on disposal of listed investments 15 662 7 789
Unbundling costs (965) -
14 697 7 789
3. Capital expenditure for the year 229 963 232 643
4. Calculation of headline earnings
Net profit 59 607 162 594
Attributable exceptional items (9 784) (11 359)
Loss/(profit) on sale and scrapping of
fixed assets after taxation and outside
shareholders' interest 4 087 (2 738)
53 910 148 497
Pro forma
30/06/01 30/06/00
5. Number of shares issued ('000) 110 968 110 968
6. Net asset value per share (cents) 545,8 414,2
7. Investments
Listed investments at cost less amounts
written off - 55 024
Unlisted investments at cost and directors'
Valuation 25 416 44 214
Loans 5 001 4 279
30 417 103 517
8. Capital commitments 21 476 26 875
Consolidated statement of changes
in shareholders' funds
12 months
(R'000) to 30/6/2001
Balance at 1 July 2000 459 603
Unbundling adjustments 23 702
Foreign currency translation reserve 62 709
Net profit for the year 59 607
Balance at 30 June 2001 605 621
Tradehold limited
(Registration number 1970/009054/06)
36 Stellenberg Road, Parow Industria 7490
PO Box 6100, Parow East 7501
