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Interim Consolidated Unaudited Financial Statements for the Six Months to 31 August 2013
Tradehold Limited
("Tradehold" or "the company" or "the group")
(Registration number 1970/009054/06)
JSE share code: TDH ISIN: ZAE000152658
Interim Consolidated Unaudited Financial Statements for the Six Months to
31 August 2013
Tradehold Limited is an investment holding company listed on the Main Board of
the JSE. At 31 August 2013, its business consisted of an 85% interest in the
property-owning Moorgarth group of companies and an indirect holding through
Reward Investments Limited, of 71% in the two operating Reward LLP's, an asset
backed, short-term lending business. These businesses are all UK-based. By far
the largest investment is in Moorgarth which manages a 51,5 million portfolio
of unencumbered retail, commercial and industrial buildings.
Although trading conditions did not change materially in the period under
review, Tradehold produced a substantially improved set of financial results.
Revenue increased 23% to 5,8 million and the group achieved a trading profit
for the period of 2,9 million (2012: 2,2 million). Exceptional items
contributed 1,3 million to produce a net profit for the six months of 4,0
million (2012: 1,0 million). Moorgarth reported an operating profit of 1,4
million (2012: 1,3 million) to earn a net profit of 0,1 million (2012: 0,7
million). Reward Investments posted a net profit of 0,7 million compared to
0,4 million in the corresponding six months.
Business environment
In the period under review the recovery of the British economy gathered pace,
although there are doubts as to its sustainability. This is mainly due to the
many uncertainties that persist in the Eurozone where debt default by certain
members remains a constant threat. In contrast with the accent in Britain over
the past few years of austerity measures in response to the country's heavy
indebtedness, there are now signs that the UK government's fiscal policy is
becoming more flexible and more growth-oriented. Investment, however, is still
below the level that would support growth in the long term. GDP is expected to
increase from 0,2% in 2012 to 1,0% in 2013. With inflation at 2,7%, however,
the country continues to experience negative growth, a situation expected to
persist beyond 2014. Interest rates have been at historical lows for several
years now. Also unchanged is the attitude of banks which remain highly risk-
averse, despite efforts by the government to encourage lending. Money remained
tight and trading conditions continued to be demanding.
Moorgarth
The recovery noticeable in the economy has also produced greater confidence in
real estate markets across the UK. Management continued to manage aggressively
the group's existing portfolio and at the end of the reporting period was in
discussion with prospective clients in respect of all the vacant space in its
buildings. Moorgarth did not acquire any new properties in the six months to
end August but continued its search for high-yielding, well-located quality
shopping centres with established tenant bases. Management also continued its
strategy of clearing the portfolio of smaller properties with limited potential
to enhance value.
A disturbing tendency developing in the market as a whole is that rentals are
not increasing in line with the upturn in the value of properties, thereby
negatively influencing yields. However, Moorgarth was able to achieve an
annualised return for the period of 5,5% which is in line with the IPD All
Property Index.
Moorgarth remains ungeared in terms of external funding and continues to have
access to group funds.
Reward
The two operating units of Reward Investments Limited - Reward Capital and
Reward Commercial Finance - continued to benefit from prevailing market
conditions. Tradehold, which funds their operations via a 12 million loan,
indirectly holds 71% in the two units. They focus on short-term, asset-backed
loans to small and medium-sized businesses and on invoice-discounting
facilities to similar businesses respectively. Reward Capital is the dominant
player of the two.
Together the two units achieved an operating profit of 1,5 million
(2012: 1,0 million). No bad debt was incurred. The company remains highly
vigilant of clients defaulting on payments and risk management is treated as a
high priority.
Comments on the results
Exceptional items are:
('million) Unaudited Unaudited Audited
6 months 6 months 12 months
to 31/08/13 to 31/08/12 to 28/02/13
- Fair-value gain/(loss) on
financial assets at fair
value through profit and loss 1,3 (1,1) 2,8
- Legal and professional expenses - (0,1) -
Total 1,3 (1,2) 2,8
Dividend
The board has decided not to declare an interim dividend.
Outlook
Moorgarth has weathered the past few years extremely well. It continues to
upgrade the quality of its portfolio and manages to restrict vacant space in
its properties to manageable levels. It is well positioned with adequate access
to capital, to benefit from the opportunities coming to market with the gradual
resurgence of the British economy. We believe it has the potential to improve
on the results achieved in the first six months, during the second half of the
year.
We remain convinced of the very considerable potential of Reward which, in an
environment of restricted lending by the banks, is creating a niche for itself
to occupy successfully in a risk - averse debt funding market that is likely to
continue for a number of years.
This general forecast has not been reviewed nor reported on by the company's
auditors.
Accounting policy
The consolidated interim financial information is prepared in accordance with
the requirements of the JSE Limited Listings Requirements for interim reports
and the requirements of the Companies Act of South Africa, Act 71 of 2008.
The JSE Limited Listings Requirements require interim reports to be prepared
in accordance with the framework concepts, the measurement and recognition
requirements of International Financial Reporting Standards (IFRS), the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and
must also, as a minimum, contain the information required by IAS 34 Interim
Financial Reporting.
The accounting policies adopted are consistent with those of the previous
financial year except as described below.
The following new IFRSs and/or IFRICs were effective for the first time for
this interim period from 1 January 2013:
- Amendment to IFRS 7, Disclosures - Offsetting Financial Assets and Financial
Liabilities
- IFRS 10, Consolidated Financial Statements
- IFRS 11, Joint Arrangements
- IFRS 12, Disclosure of Interests in Other Entities
- IFRS 13, Fair Value Measurement
- Amendments to IAS 1 - Presentation of Items of Other Comprehensive Income
- Revised IAS 28, Investments in Associates and Joint Ventures
There was no material impact on the interim financial statements identified
based on management's assessment of these standards.
Taxes on income in the interim period are accrued using the tax rate that would
be applicable to the expected total annual profit or loss.
Preparation of financial results
The preparation of the financial results was supervised by the group financial
director, Cornus Moore, B Com. These results have not been audited nor have
they been reviewed by the group's auditors, PricewaterhouseCoopers Inc.
Reporting currency
Items included in the consolidated interim financial information of each of the
group's entities are measured using the currency of the primary economic
environment in which each of the entities operate (the 'functional currency').
The consolidated annual financial statements are presented in Pound Sterling.
CH Wiese C Moore
Chairman Director
Malta
24 October 2013
Directors and administration
Executive directors: CH Wiese, C Moore and TA Vaughan
Non-executive directors: MJ Roberts, C Stassen, HRW Troskie and JD Wiese
Independent non-executive directors: MJ Roberts, C Stassen and HRW Troskie
Company secretary: JF Pienaar
Transfer secretary: Computershare Investor Services (Pty) Ltd
Sponsor: Bravura Equity Services (Pty) Ltd
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
('000) 31/08/13 31/08/12 28/02/13
Revenue 5 795 4 719 10 095
Trading profit 2 892 2 201 3 561
Exceptional items 1 288 (1 167) 2 823
Operating profit 4 180 1 034 6 384
Finance income 51 191 257
Finance cost (34) (25) (63)
Profit before taxation 4 197 1 200 6 578
Taxation 221 151 84
Profit for the period 3 976 1 049 6 494
Other comprehensive income
Currency translation differences - - (47)
Total comprehensive income for the period 3 976 1 049 6 447
Profit attributable to:
Owners of the parent 3 666 757 6 527
Non-controlling interest 310 292 (33)
3 976 1 049 6 494
Total comprehensive income attributable to:
Owners of the parent 3 666 757 6 480
Non-controlling interest 310 292 (33)
3 976 1 049 6 447
Earnings per share (pence): basic and diluted
- basic 2,6 0,5 4,7
- headline earnings 2,6 0,2 6,4
Number of shares for calculation of
earnings per share ('000) 138 567 138 394 138 476
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
('000) 31/08/13 31/08/12 28/02/13
Non-current assets 52 616 54 875 51 900
Investment properties 46 506 49 198 46 341
Property, plant and equipment 5 449 5 644 5 524
Deferred taxation 27 25 -
Financial assets 634 8 35
Current assets 54 396 45 877 51 136
Financial assets 10 346 6 301 10 238
Trade and other receivables 14 477 11 715 10 714
Inventories - 32 -
Cash and cash equivalents 29 573 27 829 30 184
Total assets 107 012 100 752 103 036
Equity 97 039 88 397 93 793
Ordinary shareholders' equity 96 631 87 730 93 465
Non-controlling interest 408 667 328
Non-current liabilities 51 51 88
Preference share capital 51 51 51
Deferred taxation - - 37
Current liabilities 9 922 12 304 9 155
Short-term borrowings 6 587 6 279 6 706
Other current liabilities 3 335 6 025 2 449
Total equity and liabilities 107 012 100 752 103 036
STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
('000) 31/08/13 31/08/12 28/02/13
Balance at beginning of the period 93 793 87 213 87 213
Proceeds from ordinary share issue - 135 133
Transactions with non-controlling
shareholders (230) - -
Total comprehensive income for the period 3 976 1 049 6 447
Distributions to equity holders (500) - -
Balance at end of the period 97 039 88 397 93 793
STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
('000) 31/08/13 31/08/12 28/02/13
Cash flows from operating activities 2 698 1 243 3 716
Cash flows utilised by investing
activities (2 959) (12 224) (12 720)
Acquisition of investment properties (208) (7 700) (8 093)
Acquisition of property, plant and equipment (37) (60) (120)
Proceeds on disposal of investment properties - 494 494
Reward loans issued (19 562) (9 314) (20 633)
Reward loans repaid 16 282 4 352 15 632
Other investment activities 566 4 -
Net cash flow (261) (10 981) (9 004)
Cash flows (utilised by)/from
financing activities (350) (187) 238
Proceeds from ordinary share issue - 135 133
Proceeds of borrowings - - 105
Repayment of borrowings (120) (322) -
Transactions with non-controlling
shareholders (230) - -
Net decrease in cash and cash equivalents (611) (11 168) (8 766)
Effects of exchange rate - - (47)
Cash and cash equivalents at beginning
of the period 30 184 38 997 38 997
Cash and cash equivalents at end of
the period 29 573 27 829 30 184
SUPPLEMENTARY INFORMATION
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
('000) 31/08/13 31/08/12 28/02/13
1. Depreciation for the period 154 153 333
2. Capital expenditure for the period 245 7 760 8 213
3. Calculation of headline earnings
Profit attributable to owners of parent 3 666 757 6 527
(Surplus)/shortfall on revaluation
of investment properties - (450) 2 800
Profit on disposal of investment properties - (44) (44)
Non-controlling interest - 74 (413)
3 666 337 8 870
Unaudited Unaudited Audited
31/08/13 31/08/12 28/02/13
4. Number of shares in issue
(net of treasury shares) ('000) 138 567 138 567 138 567
5. Net asset value per share (pence) 69,7 63,3 67,5
6. Financial assets
Listed investments at fair value 7 946 4 489 6 657
Unlisted investments at fair value - 1 812 3 581
Loans 3 034 8 -
10 980 6 309 10 238
7. Contingent liabilities - - -
SEGMENTAL ANALYSIS Trading Total
('000) Revenue profit/(loss) assets
Six months to 31 August 2013 (unaudited)
Property - retail 1 860 1 378 38 722
- commercial 245 138 5 850
- offices 137 (5) 4 128
- leisure 1 388 158 6 719
- other - (4) 1 027
Short-term lending 2 165 1 484 13 798
Treasury - (257) 36 768
5 795 2 892 107 012
Six months to 31 August 2012 (unaudited)
Property - retail 1 562 851 36 858
- commercial 275 767 7 883
- offices 181 (15) 4 397
- leisure 1 381 154 7 226
Short-term lending 1 320 1 005 10 120
Treasury - (561) 34 268
4 719 2 201 100 752
Twelve months to 28 February 2013 (audited)
Property - retail 3 288 11 36 732
- commercial 522 (514) 6 817
- offices 441 (973) 4 000
- leisure 2 833 1 119 6 750
- other - (61) 197
Short-term lending 3 011 2 036 11 820
Treasury - 1 943 36 720
10 095 3 561 103 036
Date: 25/10/2013 09:39:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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