| Thu 9 Oct 2003, 15:58 | | Interim results for the period to 31 August 2003 |
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Tradehold Limited - Interim results for the period to 31 August 2003
Tradehold Limited
(Registration number 1970/009054/06)
JSE share code: TDH ISIN: ZAE000026902
Group income statement
Unaudited Unaudited
8 months 8 months
to 6 months to 6 months to to
28/02/03 31/08/02 31/08/03 31/08/03 31/08/02 28/02/03
GBP"000 GBP"000 GBP"000 R"000 R"000 R"000
276 997 193 833 149 470 Revenue 1 829 535 3 035 636 4 184 191
225 472 144 271 149 470 Continued 1 829 535 2 260 635 3 369 226
operations
Discontinued
51 525 49 562 - operations - 775 001 814 965
(8 129) (29 058) (7 418) Operating loss (91 283) (452 342) (124 823)
5 754 (11 081) (7 418) Continued (91 283) (170 493) 94 763
operations
Discontinued
(13 883) (17 977) - operations - (281 849) (219 586)
Net interest
738 665 286 received 3 501 10 453 11 073
Loss before
(7 391) (28 393) (7 132) exceptional (87 782) (441 889) (113 750)
items
(33 845) (4 788) 318 Exceptional 3 934 (75 411) (477 126)
items
(41 236) (33 181) (6 814) Loss before (83 848) (517 300) (590 876)
taxation
(1 732) (1 661) (1 061) Taxation (13 113) (25 116) (32 010)
(39 504) (31 520) (5 753) Loss after (70 735) (492 184) (558 866)
taxation
(12 958) (12 292) (1 572) Minority (19 429) (192 610) (181 689)
interest
Attributable
(11) (9 991) (1 572) to normal (19 429) (156 380) (657)
activities
Attributable
(12 947) (2 301) - to exceptional - (36 230) (181 032)
items
(26 546) (19 228) (4 181) Net loss (51 306) (299 574) (377 177)
pence pence pence Earnings per cents cents cents
share
- before
(1,6) (4,8) (1,3) exceptional (15,9) (75,0) (23,3)
items
- after
(7,6) (5,5) (1,2) exceptional (14,8) (86,3) (108,6)
items
(1,4) (4,8) (1,3) - headline (15,9) (74,4) (20,1)
earnings
Number of
shares for
calculation of
earnings per
347 330 347 330 347 330 share ("000) 347 330 347 330 347 330
Group balance sheet
Unaudited Unaudited
28/02/03 31/08/03 31/08/03 28/02/03
GBP"000 GBP"000 R"000 R"000
71 657 73 671 Non-current assets 854 584 929 254
56 377 61 983 Property, plant and equipment 719 003 731 097
10 956 11 598 Investments 134 537 142 083
4 324 90 Deferred taxation 1 044 56 074
80 548 89 830 Current assets 1 042 028 1 044 542
29 679 32 418 Inventories 376 049 384 877
17 891 20 962 Accounts receivable 243 159 232 009
32 978 36 450 Cash and cash equivalents 422 820 427 656
152 205 163 501 Total assets 1 896 612 1 973 796
62 560 58 360 Ordinary shareholders" equity 676 971 811 288
12 12 Preference share capital 144 144
9 875 8 536 Minority interest 99 018 128 054
21 556 39 098 Non-current liabilities 453 537 279 538
- 18 250 Long-term loans 211 700 -
21 556 20 848 Other non-current liabilities 241 837 279 538
58 202 57 495 Current liabilities 666 942 754 772
2 038 491 Short-term loans 5 696 26 429
56 164 57 004 Other current liabilities 661 246 728 343
152 205 163 501 Total equity and liabilities 1 896 612 1 973 796
Group cash flow statement
Unaudited Unaudited
6 months to 6 months to
31/08/02 31/08/03 31/08/03 31/08/02
GBP"000 GBP"000 R"000 R"000
(3 650) (5 293) Cash flow from operations (98 974) (57 705)
(4 091) (8 327) Investment activities (101 952) (64 894)
(3 079) (7 683) Net acquisition of fixed assets (94 063) (48 398)
(1 012) (644) Other investment activities (7 889) (16 496)
(7 741) (13 620) Net cash flow (200 926) (122 599)
2 828 17 092 Financing activities 196 090 44 512
2 857 389 Proceeds from share issue of 5 123 44 985
subsidiary
(29) 16 703 Net debt raised/(repaid) 190 967 (473)
(Decrease)/increase in cash and
(4 913) 3 472 cash equivalents (4 836) (78 087)
Group statement of changes in shareholders" equity
Unaudited Unaudited
6 months to 6 months to
31/08/02 31/08/03 31/08/03 31/08/02
GBP"000 GBP"000 R"000 R"000
99 833 62 560 Balance at 1 March 811 288 1 627 278
- (19) Exchange rate adjustments (83 011) (13 843)
(19 228) (4 181) Net loss for the period (51 306) (299 574)
80 605 58 360 Balance at 31 August 676 971 1 313 861
Supplementary information
Unaudited Unaudited
6 months to 6 months to
31/08/02 31/08/03 31/08/03 31/08/02
GBP"000 GBP"000 R"000 R"000
2 461 2 241 1. Depreciation for the period 27 437 38 684
3 163 9 082 2. Capital expenditure for the 111 191 49 718
period
3. Calculation of headline earnings
(19 228) (4 181) Net loss (51 306) (299 574)
2 487 (318) Attributable exceptional items (3 934) 39 181
(Profit)/loss on sale and
scrapping of fixed assets after
129 (2) taxation and minority interest (24) 2 028
(16 612) (4 501) (55 264) (258 365)
Unaudited Unaudited
28/02/03 31/08/03 31/08/03 28/02/03
347 330 347 330 4. Number of shares in issue ("000) 347 330 347 330
18,0 16,8 5. Net asset value per share 194,9 233,6
(pence/cents)
6. Investments
10 956 11 598 Loans 134 537 142 083
14 370 8 350 7. Capital commitments 96 860 186 350
18 186 17 425 8. Contingent liabilities 202 130 235 836
32 452 33 874 9. Operating lease commitments 392 938 420 837
Analysis of results
Unaudited Unaudited
6 months to 6 months to
31/08/02 31/08/03 31/08/03 31/08/02
GBP"000 GBP"000 R"000 R"000
Attributable earnings of Brown
(17 933) (1 816) & Jackson plc (22 439) (279 125)
- (3 634) Earnings of Tradegro (UK) Ltd (44 489) -
1 192 951 Other Tradehold Ltd group companies 11 688 18 732
(16 741) (4 499) Loss before exceptional items (55 240) (260 393)
(2 487) 318 Attributable exceptional items 3 934 (39 181)
(19 228) (4 181) Net loss (51 306) (299 574)
Commentary
In the six months to 31 August 2003 Tradehold"s investments performed
substantially better than in the corresponding period in 2002. Losses in its
retail operations have been reduced significantly with especially Brown &
Jackson vigorously on its way back to sustainable levels of growth and
profitability. Due to the highly cyclical nature of British retailing, results
for the first half of the year are traditionally poor while in the second half
sales volumes are boosted by the Christmas season in particular. In the light of
its improved results for the first six months, Tradehold is confident that it
will be able to report a profit for the 2004 financial year.
The board is not proposing a dividend for the six months to 31 August 2003.
Operating review
Brown & Jackson plc
In the first half of the financial year management continued with the extensive
re-positioning of its sole business, the Poundstretcher chain, a process that
has been gaining momentum since the new team took over in September 2002.
Excellent progress has been made, with the rate of recovery ahead of market
expectations. The business remains debt-free.
Sales increased 5,6% to GBP122,1 million and like-for-like sales, 4,0%. Margins
were in line with expectations and ahead of last year, whilst stock levels were
materially lower. The loss for the period was at GBP4,6 million considerably
lower than the GBP8,0 million reported for the corresponding period in 2002. The
loss per share was 1,9p as against a loss of 20,7p the previous year when the
company also had to contend with a loss of GBP27,8 million on discontinued
operations.
During the half-year, 64 stores were renovated as part of a low-cost
modernisation programme that also involved the raising of housekeeping and
merchandising standards. All the stores upgraded to date have delivered higher
than expected sales increases. Six loss-making stores were closed and six new
outlets opened. Poundstretcher now operates 340 stores providing more than 220
000 m2 trading space.
To date some 70% of all product ranges have been upgraded significantly in terms
of quality and value, and the chain is moving increasingly to direct sourcing.
Margins have improved as a result.
In September Brown & Jackson launched a new brand called `... instore" in seven
stores on a pilot basis, part of the motivation being that research had shown
non-shoppers were deterred by the Poundstretcher brand. At the same time the
business itself has undergone such fundamental change that it now bears little
resemblance to what it was a year ago. The pilot stores offer a much more
pleasant and contemporary shopping environment. Initial sales have been
excellent with significant growth in customer flow and average spend.
In the first six weeks of the new reporting period sales increased 2,4% while
like-for-like sales were level. Sales for this period were expected to be
adversely affected by the disruption of modernising a further 24 stores and the
`... instore" launch which included one new store opening. In addition, this
period last year was one of exceptionally high markdowns, clearing significant
terminal stocks. Terminal stocks are low this year. As a result, margins for the
six-week period are significantly higher than last year and sales of full-price
products are well up on the previous year. The pre-Christmas modernisation and
new store programmes have been completed, autumn ranges have been well received
and everything is in place for the busy Christmas trading period.
Tradegro UK
The interests of Tradegro UK are centred in three areas, the retail chain Your
More Store (YMS), a portfolio of 73 freehold properties acquired from Brown &
Jackson plc in the previous financial year for GBP34,6 million, and 16 branches
in Poland.
The first half of the year saw significant changes at YMS. Not only did a new
top management team under CEO Carel Stassen take over the business, but its head
office was also moved from Glasgow to Leeds, resulting in a number of staff
redundancies.
In this period YMS increased like-for-like sales 2,9% compared to the same
period in 2002 despite stockholding reducing 47% to GBP4,2 million (2002: GBP8,0
million). Turnover increased 1,7% to GBP26,0 million (2002: GBP25,6 million). An
intensive programme to clear redundant stock cluttering the supply line was very
successful and the business now enjoys one of the cleanest stock positions in
its history. Despite the clearance programme, profit margins were nevertheless
higher than in the previous year.
Six underperforming stores were closed, thereby reducing the number of stores to
194. While cash flow benefited from the lower stock levels, it was placed under
considerable pressure by a lack of creditor finance.
YMS has embarked on a substantial store refurbishment programme, and by the end
of October, 19 stores in Northern Ireland will have been renovated. These
upgraded stores are expected to boost sales considerably over the festive
season.
The Polish stores have reported an improved performance. However, this business
is still to break even.
Accounting policy
The interim report has been compiled in terms of statement AC 127: Interim
financial reporting, South African Generally Accepted Accounting Practices and
the Fourth Schedule to the South African Companies Act. The accounting policy is
in accordance with that adopted in the financial statements for the period ended
28 February 2003.
Developments since the end of the reporting period
On 3 October 2003 Tradegro UK sold 41 of the properties in its portfolio
retaining 31 with a value of GBP8 million (one, a distribution centre, was sold
at an earlier stage). The properties retained are ones housing YMS outlets. The
function of the group"s property portfolio is to support its primary activity,
which is retailing. By selling off those properties not occupied by YMS it is
freeing up capital for new opportunities that may arise.
After the reporting period Tradegro UK conditionally sold 25% of its holding in
YMS to the chain"s management team under Mr Carel Stassen and a further 49% to
the South African retail group Pepkor, thereby retaining a 26% interest. As part
of the latter transaction, which is subject to certain regulatory approvals,
Pepkor also acquired a 49% stake in B&J Poland. The group believes YMS can
benefit substantially from the excellent back-office systems developed by Pepkor
and the introduction of new capital and loan finance from the latter will help
reduce the dependence on outside finance.
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. Rand equivalents are
provided to comply with regulatory requirements.
C Moore G Bernard
Director Director
Luxemburg
10 October 2003
Date: 09/10/2003 03:52:19 PM Produced by the JSE SENS Department
