| Fri 15 Feb 2002, 0:00 | | Tradehold Limited - Interim Profit Announcement Fo |
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December 2001
Tradehold Limited
(Registration number 1970/009054/06)
JSE share code: TDH ISIN number: ZAE 000026902
36 Stellenberg Road, Parow Industria 7490
P O Box 6100, Parow East 7501
"The group's short-term strategy is to consolidate its activities while
increasing its focus on product offering and profitability."
Christo Wiese, chairman
Tradehold holds no material assets in South Africa. Its principal income
stems from an indirect interest of 69% in Brown & Jackson plc, the British
retail group listed on the London Stock Exchange. Brown & Jackson's main
business is variety discount retailing and its main objective is to meet
profitably the needs of consumers with a lower discretionary spending power.
Brown & Jackson conducts its business through four main operating
subsidiaries - Poundstretcher, What Everyone Wants, Your More Store and The
Famous Brunswick Warehouse. The four chains operate 758 outlets combined,
742 in the UK and 16 in Poland.
Rights issue
Despite highly volatile market conditions Tradehold's rights issue in
October received surprisingly strong support from shareholders who took up
211 million or 89% of the available 236,4 million shares. The funds
generated were used to redeem local debts of R500 million taken over by
Tradehold at the time of the restructuring and the attendant unbundling of
Pepkor in October 2000. Titan Global Investments were the underwriters for
the rights issue.
Changes in management
With Brown & Jackson posting significantly weaker results during the past
year, new appointments were made in several important positions in November
2001 to strengthen the company's top management:
- Carel Stassen, previous managing director of Pepkor, was appointed
executive vice-chairman of Brown & Jackson and immediately took over
management of the company,
- Daan Venter, then managing director of Ackermans, was appointed managing
director of the struggling What Everyone Wants.
Together with these appointments, several changes were made at top
management level and prompted an in-depth re-analysis of all aspects of the
business to improve the group's profitability.
Operational review
Although Brown & Jackson achieved an increase of 6,2% in turnover on last
year's figures, like-for-like sales (excluding the turnover of new stores)
were unchanged. This performance does, however, represent a significant
improvement on a year ago when like-for-like sales showed a negative growth
of 7,5%. Operating profit is just over half of the figure for the
corresponding six months.
To allow management to increase the competitiveness of the existing business
by upgrading existing stores and improving its product offerings, it was
decided to change its policy of rapid expansion for the time being to one of
slower and more controlled growth. Consequently only 28 new stores were
opened, compared to 74 in the corresponding period.
Old stock had to be moved and prices were cut dramatically to make way for
new and more exciting product ranges. These price reductions (in total 9,5
million) had a significant effect on company results.
Poundstretcher, the largest operating chain in the group, posted the best
results of the four. Sales increased by 9,4% and like-for-like sales
increased by 4,5% but operating profit decreased by 5,6% as profit margins
were put under pressure by competition in the clothing retail industry. A
further nine stores were opened, bringing the total number of Poundstretcher
outlets to 334.
The sixteen stores trading under the Poundstretcher trademark in Poland have
yet to break even.
Your More Store While sales increased by 6,5% and like-for-like sales by
2,1%, operating profits plummeted by 54,8%. Two new stores were opened.
What Everyone Wants Like-for-like sales decreased by 8,5% and the
operating profit achieved during the corresponding six months, turned into a
considerable operating loss. Because of problems experienced by the chain,
management will refocus the business during the next six to twelve months to
better meet the changing needs of customers who now insist on fashionable,
quality clothing at competitive prices. This repositioning should begin to
impact positively from the group's 2003 financial year.
The Famous Brunswick Warehouse A new management team has been appointed
after the chain's unsatisfactory performance that led to an operating loss.
The chain expanded rapidly in terms of outlets and now has 68 shops.
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 in the financial statements for the year ended
30 June 2001.
Prospects
The group's short-term strategy is to consolidate its current activities
while increasing its focus on product offering and profitability. Stock
levels were reduced with the sale of old stock. Like-for-like sales during
the first five weeks of the new period under review, are in line with those
of a year ago.
Brown & Jackson's directors predict that the group will more or less break
even in the year ending 30 June 2002. They believe the steps taken during
the past months to effect an about-turn in the two weak subsidiaries - What
Everyone Wants and The Famous Brunswick Warehouse - will, in time, enable
them to again make a satisfactory contribution to group results.
By order of the Board
C H Wiese C Moore
Chairman Director
15 February 2002
Consolidated income statement
Unaudited Unaudited 12 months
6 months to 6 months to Change to
(R'000) 31/12/01 31/12/00 % 30/06/01
Turnover 3 674 860 2 657 067 38 4 756 234
Operating profit 152 286 233 887 (35) 134 957
Net interest paid 14 013 13 525 4 39 202
Profit before
exceptional items 138 273 220 362 (37) 95 755
Exceptional items - 6 676 14 697
Profit before taxation 138 273 227 038 (39) 110 452
Taxation 8 777 57 523 (85) 13 765
Profit after taxation 129 496 169 515 (24) 96 687
Outside shareholders' interest 42 839 53 969 (21) 37 080
Attributable to
normal activities 42 839 51 629 32 167
Attributable to
exceptional items - 2 340 4 913
Net profit 86 657 115 546 (25) 59 607
Earnings per share (cents)
- before exceptional items 41,0 100,2 (59) 44,9
- after exceptional items 41,0 104,1 (61) 53,7
- headline earnings 40,4 102,7 (61) 48,6
Number of shares for
calculation of earnings
per share ('000) 211 165 110 968 110 968
Consolidated balance sheet
Unaudited
(R'000) 31/12/01 30/06/01
Non-current assets 1 383 026 967 986
Fixed assets 1 334 527 937 569
Investments 48 499 30 417
Current assets 2 376 395 1 599 424
Inventories 1 130 624 878 872
Accounts receivable 412 719 171 926
Bank balances and cash 833 052 548 626
Total assets 3 759 421 2 567 410
Ordinary shareholders' funds 1 701 704 605 621
Preference share capital 144 46
Outside shareholders' interest 377 368 242 199
Non-current liabilities 155 136 113 397
Long-term loans - 625
Deferred taxation 8 912 6 326
Other non-current liabilities 146 224 106 446
Current liabilities 1 525 069 1 606 147
Short-term loans and bank overdrafts 10 790 824 871
Other current liabilities 1 514 279 781 276
Total shareholders' funds and liabilities 3 759 421 2 567 410
Analysis of net profit
Unaudited Unaudited
6 months to 6 months to
(R'000) 31/12/01 31/12/00
Attributable earnings of Brown & Jackson plc 93 689 112 965
Net operating costs of Tradehold Ltd (104) (334)
Net interest paid after taxation of Tradehold Ltd (6 928) (1 421)
Profit before exceptional items 86 657 111 210
Attributable exceptional items - 4 336
Net profit 86 657 115 546
Consolidated cash flow statement
Unaudited Unaudited
6 months to 6 months to
(R'000) 31/12/01 31/12/00
Cash flow from operations 682 744 423 335
Dividends paid (20 066) (19 241)
Cash retained from operations 662 678 404 094
Investment activities (104 574) (122 495)
Net acquisition of fixed assets (97 856) (146 810)
Other investment activities (6 718) 24 315
Net cash flow 558 104 281 599
Financing activities (273 678) 367 783
Proceeds from share issue 541 028 46
Net debt (repaid)/raised (814 706) 367 737
Increase in bank balances and cash 284 426 649 382
Supplementary information
Unaudited Unaudited
6 months to 6 months to
(R'000) 31/12/01 31/12/00
1. Depreciation for the period 75 502 55 502
2. Capital expenditure for the period 92 680 149 930
3. Calculation of headline earnings
Net profit 86 657 115 546
Attributable exceptional items - ( 4 336)
(Profit)/loss on sale and scrapping of fixed
assets after taxation and outside
shareholders' interest (1 278) 2 706
85 379 113 916
Unaudited
31/12/01 30/06/01
4. Number of shares issued ('000) 347 330 110 968
5. Net asset value per share (cents) 489,9 545,8
6. Investments
Unlisted investments at cost and
directors' valuation 34 736 25 416
Loans 13 763 5 001
48 499 30 417
7. Capital commitments 29 552 21 476
Consolidated statement of changes in
shareholders' funds
Unaudited Unaudited
6 months to 6 months to
(R'000) 31/12/01 31/12/00
Balance at 1 July 605 621 459 603
Proceeds from share issue 540 930 -
Exchange rate adjustments 479 593 63 024
Unbundling adjustment and
share issue costs - 29 133
Net profit for the period 86 657 115 546
Dividend paid (11 097) -
Balance at 31 December 1 701 704 667 306
