TRUWORTHS INTERNATIONAL. Truworths International Limited. Interim report

Transcription

1 TRUWORTHS INTERNATIONAL Truworths International Limited Interim report for the 26 weeks ended 31 December 2000

2 CONTINUING OPERATION HIGHLIGHTS Operating profit increased by 20,1% Headline earnings per share up 17,7% Growth in sales of 12,1% Dividend per share increased by 16,7% Sound cash position further improved TRUWORTHS INTERNATIONAL TOTAL OPERATION HIGHLIGHTS Operating profit increased by 32,3% Comment Group results Following earlier indications of better performance when compared with the corresponding period in the previous financial year, the board is pleased to report that group headline earnings from continuing operations grew by 17,7% to 22,6 cents per share for the six months ended 31 December This resulted from further improvement in the core Truworths business where highly accurate reading of the fashion market by the buying and support teams, together with well complemented company growth strategies, are meeting with encouraging success. For all operations the increase in group headline earnings per share was a significant 48,7% over the figure for the period to December 1999, during which the Australian subsidiary, Sportsgirl, was placed under voluntary administration following on going losses. The administrators made a first distribution to creditors of Au$4,1 million on 14 September 2000 of which group subsidiaries received Au$1,7 million (R7, 2 million), which has been recorded as an exceptional item. The group s sound cash position was further enhanced in the period under review, with

3 net bank and cash balances increasing by R66 million to R216, 9 million. Truworths results Truworths countered the challenges of a sluggish economy, lower inflation and changing patterns in consumer spending through concentrating on core competencies of focusing and developing unique retail formulae, extending new initiatives and implementing strategies to manage expenses. Merchandise sales were up 12,1% to R823,3 million and trading, notably in November and especially in December, when sales grew 18,7%, was ahead of expectations. The new millenium fashion emporium opened at Menlyn Park in Pretoria enjoyed excellent customer reaction and made an encouraging contribution. The performance of Identity continued to be most promising. This concept was introduced last year in a pilot phase of 13 stand-alone stores to meet the demand for fashion at extremely good prices and to launch our cash retailing strategy. Identity s expansion by the end of this financial year to 21 stores, offering a focused range of menswear and womenswear, is on schedule. Headline earnings improved by 19,6% to R103,4 million. There was a 20,1% increase in operating profit from R124,8 million to R149,8 million. Operating profit before interest and taxation as a percentage of revenue increased from 16,2% last year to 17,5% as a result of increased market share and improved productivity in terms of sales per square metre and per full time employee. Cost management measures, including a tougher approach to delinquent credit, proved effective. Arrears as a percentage of the total book were reduced, recoveries improved and collections were satisfactory. Prospects It is expected that South African retailers will continue to grapple with highly competitive and challenging market conditions for the remainder of this financial year. Nevertheless, the positive trend in sales has continued in January with sales growth of approximately 12%, and

4 management anticipates a reasonable growth in profits over the previous year, provided the success of growth strategies for additional stores, format development, new initiatives and cost containment prevails. One of the new initiatives offering personal loans to selected account holders is being undertaken on a pilot basis through Truworths Financial Services (Pty) Ltd. The partner in this joint venture is Woolworths Financial Services. The loan book will be funded off balance sheet initially and it is anticipated that Truworths will not have material exposure to bad debt. Wooltru unbundling The board has been consulted by Wooltru on its strategy to unbundle its holdings in Truworths International Ltd and other listed group subsidiaries to its shareholders. The board has been advised that there are a number of processes that have to be completed before an unbundling can take place. Shareholders will be kept informed of developments. Approval This interim report was approved by the directors on 15 February 2001 and is signed on their behalf by MS Mark Chairman and Chief executive officer AJ Taylor Director Truworths International Limited (Registration number 1944/017491/06) SRG House, 1 Mostert Street, Cape Town 8001 PO Box 600, Cape Town 8000 Auditors: Ernst & Young Directors: MS Mark (Chairman and CEO), RG Dow*, BD Lapin*, CT Ndlovu*, AE Parfett*, LA Tager* and AJ Taylor * Non-executive Company secretary: C Durham Transfer secretaries: Mercantile Registrars Limited 10th Floor, 11 Diagonal Street, Johannesburg 2001 PO Box 7184, Johannesburg 2000 (South Africa) Transfer Secretaries (Pty) Limited PO Box 2401, Windhoek Shop 12, Kaiserkrone Centre, Post Street Mall, Windhoek (Namibia) This interim report is available on our website at

5 Abridged balance sheet Unaudited ended 31 Dec ended 30 Jun R 000 R 000 R 000 Assets Non-current assets Property, plant and equipment Investments and loans Current assets Inventories Accounts receivable Bank and cash Equity and liabilities Ordinary shareholders interest Outside shareholders interest Total shareholders equity Interest bearing liabilities Interest-free liabilities Number of shares in issue (000 s) Net asset value per share (cents) 179,2 152,3 160,5

6 Abridged income statement Unaudited ended 31 Dec ended 30 Jun Change 2000 Notes R 000 R 000 % R 000 Revenue Continuing operations , Discontinuing operations Cost of sales ( ) ( ) ( ) Gross profit Continuing operations Discontinuing operations Total operating expenses ( ) ( ) ( ) Depreciation (22 613) (35 549) (59 930) Occupancy costs (68 358) ( ) ( ) Employment costs ( ) ( ) ( ) Other operating costs (90 126) ( ) ( ) Operating profit before interest and taxation , Continuing operations , Discontinuing operations (11 562) (13 736) Interest paid (129) (7 284) (8 087) Continuing operations (129) (700) (1 503) Discontinuing operations (6 584) (6 584) Operating profit before exceptional items Exceptional items ( ) ( ) Net profit/(loss) before taxation (6 527) Taxation (46 219) (37 411) (71 464) Net profit/(loss) after taxation (43 938) (9 436) Outside shareholders interest in (profit)/loss (30) (42) 11 Net profit/(loss) attributable to ordinary shareholders (43 980) (9 425) Distributions to shareholders (21 999) (15 705) (15 705) Retained profit/(loss) for the period (59 685) (25 130) Transfer (to)/from non-distributable reserves (479) 184 (2 242) Reversal of translation reserve in discontinuing operations Retained profit at beginning of period Retained profit at the end of the period Headline earnings per share All operations (cents) 22,6 15,2 48,7 32,8 Continuing operations (cents) 22,6 19,2 17,7 37,3 Diluted headline earnings per share All operations (cents) 22,3 14,9 49,7 32,2 Continuing operations (cents) 22,3 18,9 18,0 36,6 Earnings per share (cents) 24,2 (9,8) (2,1) Diluted earnings per share (cents) 23,9 (9,6) (2,0) Dividend per share (cents) 7,0 6,0 16,7 12,5 Weighted average number of shares (000 s)

7 Abridged cash flow statement Unaudited ended 31 Dec ended 30 Jun R 000 R 000 R 000 CASH FLOW FROM OPERATING ACTIVITIES Cash flow from trading Depreciation Working capital movements Cash generated from operations Net interest received Dividends received Taxation paid (88 284) (33 043) (72 344) Dividends paid (21 992) (15 685) (15 705) Cash inflow from operations CASH FLOW FROM INVESTING ACTIVITIES Net acquisition of property, plant and equipment (32 466) (51 375) (66 774) Loans and other investment movements Net cash outflow from investing activities (30 326) (50 857) (54 703) CASH FLOW FROM FINANCING ACTIVITIES Increase/(decrease) in share capital and premium (135) Repayment of long term borrowings (1 223) (3 984) Decrease in outside shareholders interest (521) (2 412) Net cash inflow/(outflow) from financing activities (1 879) (4 609) Net increase in cash and cash equivalents Net cash inflow/(outflow) on discontinuance (76 024) (76 893) Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period Bank and cash Interest bearing liabilities ( ) Effect of translation changes

8 Abridged statement of changes in equity Unaudited ended 31 Dec ended 30 Jun R 000 R 000 R 000 Ordinary shareholders interest at beginning of year Net profit/(loss) attributable to ordinary shareholders (43 980) (9 425) Distributions to shareholders (21 999) (15 705) (15 705) Losses on transactions with outside shareholders (2 242) Reversal of translation reserve in discontinuing operations Transfer (to)/from non-distributable reserves (479) 184 Share capital and share premium movements (135) Ordinary shareholders interest at end of the period

9 Notes to the interim report Unaudited ended 31 Dec ended 30 Jun Change 2000 R 000 R 000 % R Basis of preparation This report complies with the requirements of AC 127, the South African Statement of Generally Accepted Accounting Practice governing interim financial reporting, as well as with part IV of Schedule 4 of the South African Companies Act and paragraph 8.56 of the Listings Requirements of the JSE Securities Exchange South Africa. 2. Accounting policies This report has been prepared on the historical cost basis and in accordance with the accounting policies which were applied in the preparation of the group s annual financial statements for the year ended 30 June Revenue Sale of merchandise Continuing operations , Discontinuing operations Interest received Investments Accounts receivable Dividends received Royalties and management fees Exceptional items Net write up of investments 199 Distribution from discontinuing operations Losses iro discontinuing operations ( ) ( ) Impairment of investment in headlease (11 000) ( ) ( ) 5. Headline earnings Headline earnings were arrived at after bringing to account: Net profit/(loss) attributable to ordinary shareholders (43 980) (9 425) Exceptional items (7 222) Profit on sale of fixed assets (77) (229) (66) Headline earnings , Continuing operations , Discontinuing operations (18 146) (20 320) 6. Segment reporting Segmental information is not disclosed as the group is regarded as having only a single material Southern African retailing segment.

10 Unaudited ended 31 Dec ended 30 Jun Change 2000 R 000 R 000 % R Future capital expenditure Contracted for Not contracted for The future capital expenditure will be financed by cash generated from operations and available cash resources. 8. Leases The group leases the majority of its land and buildings under operating leases, whereas other operating assets are generally purchased. The lease agreements of certain of the group s store and related premises provide a minimum annual rental payment and additional payments on the basis of turnover. At 31 December 2000 the group s future minimum property operating lease commitments for continuing operations were as follows: Expiry: Within 1 year Between 2 and 5 years Between 6 and 10 years Seasonality There is no material seasonal variation in trading between the first six months and the second six months. 10.Comparative figures Certain comparative figures have been regrouped and restated. INTERIM DIVIDEND The directors have resolved to declare a dividend in respect of the six months ended 31 December 2000 in the amount of 7,0 (1999: 6,0) cents per share, to members registered as such at the close of business on Friday 2 March The dividend will be paid in the currency of the Republic of South Africa on Monday 26 March 2001 when dividend cheques will be posted, or alternatively dividends due will be transferred electronically to the bank accounts of those members who have requested payment in such manner. By the order of the Board C Durham Cape Town Company Secretary 15 February 2001 GRAPHICOR 22539