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TRUWORTHS INTERNATIONAL
- HEADLINE EARNINGS PER SHARE
- INCREASED BY 13,3%
EARNINGS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS INCREASED BY 17,4% TO R143,6
MILLION
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 1998
ABRIDGED INCOME STATEMENT
NOTE 1998 1997 CHANGE
R000'S R000'S %
AUDITED AUDITED
REVENUE 1 804 792 1 771 869
CONTINUING OPERATIONS 1 1 804 792 1 752 797 3,0
DISCONTINUED OPERATIONS 2 - 19 072
OPERATING PROFIT BEFORE
EXCEPTIONAL ITEMS 3 226 044 198 651
CONTINUING OPERATIONS 226 044 202 211 11,8
DISCONTINUED OPERATIONS 2 - (3 560)
EXCEPTIONAL ITEMS 4 (2 036) (7 528)
PROFIT BEFORE TAXATION 224 008 191 123 17,2
TAXATION (79 696) (67 352)
PROFIT AFTER TAXATION 144 312 123 771 16,6
ATTRIBUTABLE TO OUTSIDE
SHAREHOLDERS (760) (1 491)
EARNINGS ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 143 552 122 280 17,4
WEIGHTED AVERAGE NUMBER OF
ORDINARY SHARES IN ISSUE (000'S) 427 014 424 740
HEADLINE EARNINGS PER SHARE
(CONTINUING OPERATIONS) (CENTS) 34,1 30,9 10,4
HEADLINE EARNINGS PER SHARE (CENTS) 34,1 30,1 13,3
EARNINGS PER SHARE (CENTS) 33,6 28,8 16,7
DIVIDENDS PER SHARE
(ANNUALISED PRO FORMA) (CENTS) 12,0 11,0
NOTES TO THE INCOME STATEMENT
1998 1997 CHANGE
R000'S R000'S %
1. REVENUE
REVENUE COMPRISES:
SALES 1 744 646 1 702 158 2,5
INTEREST RECEIVED FROM DEBTORS 41 713 40 851
INTEREST RECEIVED FROM
INVESTMENTS 17 661 8 578
OTHER INCOME 772 1 210
1 804 792 1 752 797
2. DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS RELATE TO LEADING CONCEPTS, AN OPERATION DISPOSED OF ON
15 JANUARY 1997. THE OPERATING AND DISPOSAL LOSSES PRIOR TO TAXATION HAVE BEEN
EXCLUDED FROM THE DETERMINATION OF HEADLINE EARNINGS OF CONTINUING OPERATIONS
AS HIGHLIGHTED IN NOTE 5 BELOW.
3. DISCLOSABLE ITEMS
DISCLOSABLE ITEMS INCLUDE:
COST OF SALES 860 045 835 606
DEPRECIATION 52 925 46 193
INTEREST PAID 7 139 10 577
OPERATING LEASE EXPENSES 200 391 200 187
4. EXCEPTIONAL ITEMS
EXCEPTIONAL ITEMS COMPRISE:
WRITE OFF OF INVESTMENT IN
HOUSEWARES LIMITED 2 036 6 177
LOSS ON SALE OF DISCONTINUED
OPERATIONS - 1 351
2 036 7 528
5. HEADLINE EARNINGS (CONTINUING OPERATIONS)
HEADLINE EARNINGS WAS ARRIVED AT AFTER BRINGING TO ACCOUNT THE FOLLOWING:
EARNINGS ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 143 552 122 280
EXCEPTIONAL ITEMS (NET OF TAXATION AND
OUTSIDE SHAREHOLDERS) 2 036 6 201
LOSS/(PROFIT) ON SALE OF FIXED ASSETS (NET OF TAXATION
AND OUTSIDE SHAREHOLDERS) 12 (697)
OPERATING LOSS OF DISCONTINUED
OPERATIONS - 3 560
145 600 131 344 10,9
ABRIDGED BALANCE SHEET
1998 1997
R000'S R000'S
AUDITED AUDITED
CAPITAL EMPLOYED
ORDINARY SHAREHOLDERS' FUNDS 615 572 480 839
OUTSIDE SHAREHOLDERS' INTEREST 3 372 6 025
TOTAL SHAREHOLDERS' INTEREST 618 944 486 864
INTEREST-BEARING DEBT 114 209 87 481
733 153 574 345
EMPLOYMENT OF CAPITAL
PROPERTY, PLANT AND EQUIPMENT 176 190 143 300
INVESTMENTS AND LOANS 30 526 27 392
CURRENT ASSETS 780 997 655 007
INVENTORIES 184 912 149 741
ACCOUNTS RECEIVABLE 446 842 412 919
BANK AND CASH BALANCES 149 243 92 347
INTEREST-FREE LIABILITIES 254 560 251 354
733 153 574 345
NUMBER OF ORDINARY SHARES IN
ISSUE (000'S) 429 526 426 251
NET ASSET VALUE PER SHARE (CENTS) 143,3 112,8
NOTE TO THE BALANCE SHEET
1998 1997
R000'S R000'S
CAPITAL COMMITMENTS
INCURRED IN THE REPORTING PERIOD 86 210 74 257
CONTRACTED 1 802 799
AUTHORISED BUT NOT CONTRACTED 73 128 70 689
ABRIDGED CASH FLOW STATEMENT
1998 1997
R000'S R000'S
AUDITED AUDITED
CASH FROM OPERATING ACTIVITIES
CASH FLOW FROM TRADING 172 705 159 023
WORKING CAPITAL REQUIREMENTS (64 160) (49 668)
DEPRECIATION 52 925 46 193
OTHER NON-CASH ITEMS (7 800) 1 081
NET INTEREST RECEIVED 52 235 39 153
TAXATION PAID (75 854) (54 858)
DIVIDENDS PAID (11 683) (9 541)
NET CASH INFLOW FROM OPERATIONS 118 368 131 383
CASH UTILISED IN INVESTING ACTIVITIES
INVESTMENT TO MAINTAIN OPERATIONS (37 790) (51 722)
INVESTMENT TO EXPAND OPERATIONS (48 420) (22 535)
LOANS AND OTHER INVESTMENTS (5 758) (1 135)
PROCEEDS ON DISPOSAL OF PROPERTY,
PLANT AND EQUIPMENT 1 859 3 070
PREMIUM ON ACQUISITION OF SHARES
ISSUED TO MINORITIES (17 331) -
NET CASH UTILISED (107 440) (72 322)
CASH EFFECT OF FINANCING ACTIVITIES
PROCEEDS ON THE ISSUE OF SHARES 21 702 66
DECREASE IN INTEREST-BEARING DEBT (5 088) (13 443)
DECREASE IN OUTSIDE
SHAREHOLDERS' INTEREST (3 226) 2 766
NET CASH INFLOW/(OUTFLOW) FROM
FINANCING ACTIVITIES 13 388 (10 611)
NET INCREASE IN CASH AND CASH
EQUIVALENTS 24 316 48 450
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 42 411 (6 039)
CASH AND CASH EQUIVALENTS AT END
OF PERIOD 66 727 42 411
COMMENT
- GROUP HIGHLIGHTS
THE YEAR UNDER REVIEW WAS AN IMPORTANT ONE IN THE LONG HISTORY OF TRUWORTHS,
SINCE ITS MERGER WITH WOOLWORTHS AND IT9S DELISTING FROM THE JOHANNESBURG STOCK
EXCHANGE ("THE JSE") IN 1981.
- ON 11 MAY 1998 TRUWORTHS INTERNATIONAL ("TI") WAS SUCCESSFULLY LISTED ON
THE JSE.
- TRUWORTHS, THE SOUTH AFRICAN BASED SUBSIDIARY OF TI CONTINUED ITS
REMARKABLE TRACK RECORD OF UNBROKEN PROFIT GROWTH IN EXCESS OF 10% FOR THE PAST
13 YEARS.
- SPORTSGIRL, THE AUSTRALIAN SUBSIDIARY OF TI MADE AN AFTER TAX PROFIT OF
AU$2,0 MILLION. ALTHOUGH THIS REPRESENTED A DECLINE ON THE PREVIOUS YEAR, IT
WAS NEVERTHELESS AN IMPROVEMENT ON THE SECOND HALF PERFORMANCE OF 1997.
- DESPITE AGGRESSIVE CAPITAL EXPENDITURE PROGRAMMES IN TRUWORTHS AND
SPORTSGIRL, THE GROUP ENDED THE YEAR WITH NET CASH RESOURCES.
- GROUP RESULTS
EARNINGS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS GREW BY 17,4% AND HEADLINE
EARNINGS PER SHARE OF CONTINUING OPERATIONS INCREASED BY 10,4% TO 34,1 CENTS.
SALES INCREASED IN TI BY 2,5% DESPITE TRUWORTHS SALES INCREASE OF 12,6%. THE
MODEST TI SALES INCREASE WAS ESSENTIALLY DUE TO THE DECLINE IN SALES IN
SPORTSGIRL OF 3% TO AU$188,4 MILLION AND AN UNFAVOURABLE MOVEMENT IN THE
EXCHANGE RATE.
THE GROUP PERFORMED WELL IN THE SECOND HALF OF THE YEAR WITH HEADLINE EARNINGS
FROM CONTINUING OPERATIONS INCREASING FROM 15,5 CENTS PER SHARE IN THE FIRST
HALF TO 34,1 CENTS FOR THE FULL YEAR. THE IMPROVED SECOND HALF WAS DUE TO
IMPROVED MARGINS IN SPORTSGIRL AND TRUWORTHS, AND BUOYANT SALES GROWTH IN
TRUWORTHS.
THE CASH RESOURCES IN THE GROUP CONTINUED TO STRENGTHEN WITH BANK AND CASH
BALANCES OF R149,2 MILLION COMPARED TO R92,3 MILLION LAST YEAR. THIS REPRESENTS
A CONSIDERABLE ADVANTAGE IN THE CURRENT ECONOMIC CLIMATE.
CAPITAL EXPENDITURE OF R86,2 MILLION WAS INCURRED DURING THE YEAR IN ORDER TO
EXPAND TECHNOLOGY, AND TO RENOVATE AND EXPAND STORES IN BOTH SOUTH AFRICA AND
AUSTRALIA.
- TRUWORTHS
THE PERFORMANCE OF THE SOUTHERN AFRICAN OPERATIONS REMAIN BUOYANT WITH AN
INCREASE IN SALES FOR THE CURRENT YEAR OF 12,6% IN A DIFFICULT ECONOMIC
ENVIRONMENT. MARKET SHARE INCREASED IN ALL CORE AREAS OF THE BUSINESS.
THE DEBTOR'S BOOK INCREASED BY APPROXIMATELY 12% WITH DELINQUENCIES IN LINE
WITH MANAGEMENT'S EXPECTATIONS AND THE PREVIOUS YEAR. THE BOOK IS HEALTHY WITH
NO UNUSUAL OR EXCESSIVE BAD DEBTS EXPECTED WITHIN THE NEXT FINANCIAL YEAR.
CAPITAL EXPENDITURE OF R49,7 MILLION WAS INCURRED IN FINANCIAL 1998 WITH
APPROXIMATELY R6,1 MILLION EXPENDED ON TECHNOLOGY AND THE BALANCE ON RENOVATING
AND EXPANDING STORES.
THE TRADING AREA OF THE STORES INCREASED BY 5,8% TO 98 400 SQUARE METERS.
TRUWORTHS NOW HAS FIVE SUCCESSFULLY OPERATING FRANCHISE STORES IN SOUTHERN
AFRICA AND THE MIDDLE EAST.
- SPORTSGIRL
AGAINST THE BACKGROUND OF AN EXTREMELY DIFFICULT RETAIL TRADING ENVIRONMENT,
THE SPORTSGIRL OPERATIONS IN AUSTRALIA AND NEW ZEALAND EXPERIENCED A REDUCTION
IN SALES OF 3,0% TO AU$188,4 MILLION IN THE CURRENT YEAR. DESPITE THIS DECREASE
IN SALES, SPORTSGIRL REFLECTED AN AFTER TAX PROFIT CONTRIBUTION OF AU$2,0
MILLION FOR THE YEAR. THIS WAS ACHIEVED PRINCIPALLY THROUGH IMPROVED GROSS
MARGINS AND THE EFFECTIVE CONTROL OF COSTS.
- PROSPECTS
WHILE THE PROSPECTS FOR GROWTH IN CONSUMER SPENDING IN BOTH SOUTH AFRICA AND
AUSTRALIA APPEAR SOMEWHAT NEGATIVE IN THE SHORT TERM, MANAGEMENT ARE
NEVERTHELESS CONFIDENT THAT REAL GROWTH IN EARNINGS AND A CONTINUED UNBROKEN
PROFIT GROWTH RECORD IS LIKELY IN THE CURRENT YEAR.
CAPITALISATION SHARE AWARD AND FINAL CASH DIVIDEND
THE DIRECTORS HAVE RESOLVED TO ISSUE CAPITALISATION SHARES TO ORDINARY
SHAREHOLDERS REGISTERED AS SUCH ON 4 SEPTEMBER 1998 ("THE LAST DAY TO
REGISTER"), PROVIDED THAT SUCH SHAREHOLDERS MAY ELECT INSTEAD TO RECEIVE A
FINAL CASH DIVIDEND OF 6,5 CENTS PER SHARE, DECLARED IN RESPECT OF THE YEAR
ENDED 30 JUNE 1998. (FINAL ORDINARY DIVIDEND NO 1).
- TERMS OF THE AWARD
THE AWARD OF CAPITALISATION SHARES TO ORDINARY SHAREHOLDERS REGISTERED AT THE
CLOSE OF BUSINESS ON THE LAST DAY TO REGISTER WILL BE DETERMINED BY THE RATIO
THAT 6,5 CENTS MULTIPLIED BY 1,07 IS TO THE WEIGHTED AVERAGE TRADING PRICES OF
THE TI ORDINARY SHARES ON THE JSE FOR THE FOUR BUSINESS DAYS ENDING ON THE
CLOSE OF BUSINESS THURSDAY, 1 OCTOBER 1998. ACCORDINGLY, SHAREHOLDERS WHO
ACCEPT CAPITALISATION SHARES WILL ENJOY AN ADVANTAGE OF APPROXIMATELY 7%, BASED
ON THE AVERAGE PRICE, OVER THE CASH DIVIDEND.
SHAREHOLDERS WILL BE ENTITLED TO DECLINE TO RECEIVE THE CAPITALISATION AWARD OR
ANY PART THEREOF AND ELECT INSTEAD TO RECEIVE THE FINAL CASH DIVIDEND OF 6,5
CENTS PER SHARE.
- FRACTIONS
NO FRACTION OF A SHARE WILL BE ALLOTTED. WHERE THE CAPITALISATION SHARES
AWARDED WOULD RESULT IN SHAREHOLDERS RECEIVING FRACTIONS OF SHARES, THOSE
FRACTIONS WILL BE AGGREGATED AND SOLD ON THE JSE FOR THE BENEFIT OF THE
RELEVANT SHAREHOLDERS.
- LISTING
SUBJECT TO THE APPROVAL OF THE JSE AND THE NAMIBIAN STOCK EXCHANGE ("THE NSE")
THE LISTING OF THE NEW ORDINARY SHARES ON THE JSE AND THE NSE WILL COMMENCE
MONDAY, 12 OCTOBER 1998.
- DOCUMENTATION
A CIRCULAR CONTAINING FULL DETAILS OF THE CAPITALISATION AWARD, TOGETHER WITH
ELECTION FORMS, WILL BE POSTED TO SHAREHOLDERS ON OR ABOUT FRIDAY, 11 SEPTEMBER
1998. SHAREHOLDERS WISHING TO ELECT TO RECEIVE THE FINAL CASH DIVIDEND WILL BE
REQUIRED TO RETURN THE COMPLETED ELECTION FORMS TO TI'S TRANSFER SECRETARIES TO
REACH THEM NO LATER THAN 12:00 ON FRIDAY, 2 OCTOBER 1998. FORMS OF ELECTION
SENT BY POST WILL BE ACCEPTED UNTIL WEDNESDAY, 7 OCTOBER 1998, PROVIDED THAT
THE ENVELOPES ARE POSTMARKED NO LATER THAN FRIDAY, 2 OCTOBER 1998.
SHARE CERTIFICATES IN RESPECT OF THE NEW ORDINARY SHARES ALLOTTED AND THE
CHEQUES IN RESPECT OF THE CASH DIVIDEND AND/OR PAYMENTS IN LIEU OF FRACTIONAL
ENTITLEMENTS WILL BE POSTED TO THE RESPECTIVE SHAREHOLDERS ON MONDAY, 12
OCTOBER 1998.
BY ORDER OF THE BOARD
A M B FREER CAPE TOWN
GROUP SECRETARY 20 AUGUST 1998
TRUWORTHS INTERNATIONAL LIMITED
(REGISTRATION NUMBER 05/17491/06)
SRG HOUSE, 1 MOSTERT STREET, CAPE TOWN 8001. PO BOX 600 CAPE TOWN 8000
AUDITORS: ERNST & YOUNG
DIRECTORS: A E PARFETT* (CHAIRMAN), M S MARK (CHIEF EXECUTIVE), R G DOW*, C A
HALL*, B D LAPIN*, L A TAGER* * NON-EXECUTIVE TRANSFER
SECRETARIES: MERCANTILE REGISTRARS LIMITED. 94 PRESIDENT STREET, JOHANNESBURG
2001. PO BOX 1053, JOHANNESBURG 2000
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