| Mon 18 Oct 2004, 9:19 | | Interim results for the six months to 31 August 20 |
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Tradehold Limited - Group interim results for the six months to 31 August 2004.
Tradehold Limited
(Incorporated in the Republic of South Africa)
(Registration number 1970/009054/06)
Share code: TDH
ISIN: ZAE000026902
(`Tradehold` or `the company`)
Group interim results for the six months to 31 August 2004.
After suffering a loss in 2004, Tradehold has returned to profitability in the
first six months of the current financial year.
Following the disposal of its interests in the retail chains Your More Store
(YMS) and B&J Poland, Tradehold`s assets at the start of the 2005 financial year
consist of a 54% controlling interest in the listed British retail group Brown &
Jackson plc, its main business, and a property portfolio held in its wholly-
owned subsidiary Tradegro UK.
Tradehold followed its rights in the successful rights issue Brown & Jackson
undertook during the period under review. The retail group, which operates some
330 stores under its Poundstretcher and ...instore brands throughout the UK and
Northern Ireland, raised GBP25,4 million to finance an extensive upgrade of its
business. The issue was fully subscribed.
Operating review
After suffering a loss in 2004, Tradehold has returned to profitability in the
first six months of the new financial year. This was due mainly to a much
improved performance by Brown & Jackson, higher investment income and profits
generated by its property division.
Brown & Jackson plc
In the first half of the financial year Brown & Jackson continued the recovery
trend begun in January 2004, reducing operating losses suffered in the
corresponding period from GBP4,6 million to GBP2,7 million. In the 26 weeks to
28 August, total sales increased 3,9% to GBP126,9 million, while like-for-like
sales grew 5%. Margins were in line with last year while stock levels were
reduced by GBP2,5 million. Gross profit increased by 35,6% to GBP12,2 million
and the gross profit margin from 7,4% to 9,6%. Net operating expenses of GBP14,9
million (2003: GBP13,6 million) resulted in an operating loss of GBP2,7 million.
At the half-year Brown & Jackson had cash reserves of GBP20,1 million and was
net-debt free.
During the half year, the roll-out of the new ...instore format continued and 42
Poundstretcher stores were converted to the new brand. ...instore provides a
shopping environment akin to mass-market quality retailers but at prices
associated with the value end of the retail market. All the converted stores
continue to experience significant increases in sales, supported by growth in
both customer flow and average spend. In the six weeks since the end of the
reporting period, the conversion of a further 15 was completed while another 10
will be added in time for the Christmas trading period. This will bring the
total number of instore outlets to 75.
The construction and fitting out of Brown & Jackson`s new distribution centre at
Huddersfield is on schedule, and the company`s head office has already been
moved to the new building. The distribution centre is expected to become
operational in January 2005.
In the six weeks since the end of the reporting period, total sales increased
7,4% and like-for-like sales 11%, with both out-of-town and High Street stores
performing well. Management is confident this trend will continue through the
key Christmas trading period for which extensive preparations have been made.
Tradegro (UK)
Although the primary function of Tradehold`s property division is to support its
retail interests, the objective is to develop it into a self-sufficient
standalone business.
At the beginning of the current financial year the portfolio consisted of 31
properties, all but one occupied by YMS branches. In terms of an intensive
restructuring of the portfolio, 17 of the 31 properties were identified for
resale. The remaining 14 are being retained for their desirable locations. To
date, 15 of the 17 have been sold, leaving 16 in the portfolio.
In terms of the division`s objective, a parcel of four buildings were acquired
after the end of the reporting period, at a cost of GBP4,4 million. Further
acquisitions are being investigated.
Comments on the results
Exceptional items consist of share issue costs of GBP837 000 relating to the
rights issue undertaken by Brown & Jackson, and profit of GBP533 000 on the
disposal of land and buildings, also by Brown & Jackson.
Outlook
Due to the highly cyclical nature of retailing, the second half of the year that
includes the decisive Christmas trading period, is crucial to the profitability
of Brown & Jackson. Given last year`s disappointing Christmas trading, the
company this year is better equipped to capitalise on this normally buoyant
trading period. We are confident that Tradehold will be able to report much
improved results for the full 12 months.
Accounting policy
The interim report has been compiled in terms of statement AC 127: Interim
financial reporting, Generally Accepted Accounting Practice and the Fourth
Schedule to the South African Companies Act. Except as set out below, the
accounting policy is in accordance with that adopted in the financial statements
for the year ended 29 February 2004.
To comply with the requirements of statement AC 132: Consolidated financial
statements and accounting for investments in subsidiaries, the Tradehold Share
Incentive Trust is now consolidated. The effect of the restatement of
comparative figures is negligible and, in sterling terms, had no impact on
either headline earnings per share or net asset value per share for the year
ended 29 February 2004.
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.
CH Wiese
Director
C Moore
Director
Luxembourg
14 October 2004
Group income statement
Unaudited Unaudited
6 months to 6 months to
12 12 months
months to
to
29/02/04 31/08/03 31/08/04 31/08/04 31/08/03 29/02/04
GBP`000 GBP`000 GBP`000 R`000 R`000 R`000
313 392 149 470 126 894 Revenue 1 501 889 1 829 535 3 776 851
Continued
280 281 122 115 126 894 operations 1 501 889 1 495 013 3 373 663
Discontinued
33 111 27 355 - operations - 334 522 403 188
(8 626) (7 418) (1 843) Operating (20 954) (91 283) (112 415)
loss
Continued
(5 366) (4 800) (1 843) operations (20 954) (59 303) (71 703)
Discontinued
(3 260) (2 618) - operations - (31 980) (40 712)
Net interest
616 246 643 received 7 527 3 014 7 488
(8 010) Loss before
exceptional
(7 172) (1 200) items (13 427) (88 269) (104 927)
Exceptional
(1 815) 318 (304) items (3 641) 3 934 (22 268)
Loss before
(9 825) (6 854) (1 504) taxation (17 068) (84 335) (127 195)
(976) (1 061) (663) Taxation (7 854) (13 113) (13 981)
Loss after
(8 849) (5 793) (841) taxation (9 214) (71 222) (113 214)
Minority
(1 494) (1 572) (1 130) interest (13 052) (19 429) (20 975)
Attributable
to normal
(1 647) (1 572) (964) activities (11 059) (19 429) (22 792)
Attributable
to
153 - (166) exceptional (1 993) - 1 817
items
Net
(7 355) (4 221) 289 profit/(loss) 3 838 (51 793) (92 239)
pence pence pence Earnings per cents cents cents
share
- before
exceptional
(1,6) (1,3) 0,1 items 1,6 (16,2) (19,8)
- after
exceptional
(2,1) (1,2) 0,1 items 1,1 (15,0) (26,8)
- headline
(2,0) (1,3) (0,3) earnings (3,2) (16,2) (25,2)
Number of
shares for
calculation
344 624 344 624 344 624 of earnings 344 624 344 624 344 624
per share
(`000)
Group balance sheet
Unaudited Unaudited
29/02/04 31/08/04 31/08/04 29/02/04
GBP`000 GBP`000 R`000 R`000
52 585 52 834 Non-current assets 636 649 649 578
34 654 37 403 Property, plant and equipment 450 706 428 079
12 937 14 061 Investments 169 435 159 803
4 994 1 370 Deferred taxation 16 508 61 696
89 023 87 913 Current assets 1 059 352 1 099 692
42 372 34 601 Inventories 416 942 523 421
12 640 16 316 Accounts receivable 196 608 156 138
34 011 36 996 Cash and cash equivalents 445 802 420 133
141 608 140 747 Total assets 1 696 001 1 749 270
54 421 54 694 Ordinary shareholders` equity 659 063 672 260
12 12 Preference share capital 144 144
8 594 19 294 Minority interest 232 493 106 158
17 547 13 770 Non-current liabilities: Provisions 165 928 216 756
61 034 52 977 Current liabilities 638 373 753 952
8 689 902 Short-term loans and bank overdrafts 10 869 107 336
52 345 52 075 Other current liabilities 627 504 646 616
141 608 140 747 Total equity and liabilities 1 696 001 1 749 270
Analysis of results
Unaudited Unaudited
6 months to 6 months to
31/08/03 31/08/04 31/08/04 31/08/03
GBP`000 GBP`000 R`000 R`000
Attributable earnings of Brown &
(1 816) (1 111) Jackson plc (12 740) (22 439)
(3 634) 1 531 Earnings of Tradegro (UK) Ltd 18 142 (44 489)
911 7 Other Tradehold Ltd group companies 84 11 201
(4 539) 427 Profit/(loss) before exceptional items 5 486 (55 727)
318 (138) Attributable exceptional items (1 648) 3 934
(4 221) 289 Net profit/(loss) 3 838 (51 793)
Group cash flow statement
Unaudited Unaudited
6 months to 6 months to
31/08/03 31/08/04 31/08/04 31/08/03
GBP`000 GBP`000 R`000 R`000
(5 333) 5 418 Cash flow from operations 56 876 (99 461)
(8 287) (5 639) Investment activities (66 854) (101 465)
(7 683) (5 032) Net acquisition of fixed assets (59 616) (94 063)
(604) (607) Other investment activities (7 238) (7 402)
(13 620) (221) Net cash flow (9 978) (200 926)
17 092 11 206 Financing activities 134 471 196 090
Proceeds from share issue of
389 10 993 subsidiary 132 114 5 123
16 703 213 Net debt raised 2 357 190 967
Increase/(decrease) in cash and
3 472 10 985 cash equivalents 124 493 (4 836)
Supplementary information
Unaudited Unaudited
6 months to 6 months to
31/08/03 31/08/04 31/08/04 31/08/03
GBP`000 GBP`000 R`000 R`000
2 241 2 283 1. Depreciation for the period 27 054 27 437
9 082 8 244 2. Capital expenditure for the period 97 691 111 191
3. Calculation of headline earnings
(4 221) 289 Net profit/(loss) 3 838 (51 793)
(318) 138 Attributable exceptional items 1 648 (3 934)
Profit on sale and scrapping of
fixed assets after taxation and
(2) (1 381) minority interest (16 361) (24)
(4 541) (954) (10 875) (55 751)
Unaudited Unaudited
29/02/04 31/08/04 31/08/04 29/02/04
344 624 344 624 4. Number of shares in issue (`000) 344 624 344 624
5. Net asset value per share
15,8 15,9 (pence/cents) 191,2 195,1
6. Investments
12 937 14 061 Loans 169 435 159 803
2 705 8 600 7. Capital commitments 103 630 33 415
13 888 15 150 8. Contingent liabilities 182 557 171 558
29 742 29 049 9. Operating lease commitments 350 040 367 403
Group statement of changes in shareholders` equity
Unaudited Unaudited
6 months to 6 months to
31/08/03 31/08/04 31/08/04 31/08/03
GBP`000 GBP`000 R`000 R`000
62 117 54 421 Balance at 1 March 672 260 804 766
(19) (16) Exchange rate adjustments (17 035) (83 011)
(4 221) 289 Net profit/(loss) for the period 3 838 (51 793)
57 877 54 694 Balance at 31 August 659 063 669 962
