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TRUWORTHS INTERNATIONAL LIMITED - Preliminary report on the audited group annual results for the 52 weeks ended 29 June 2014

Release Date: 21/08/2014 15:22
Code(s): TRU     PDF:  
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Preliminary report on the audited group annual results for the 52 weeks ended 29 June 2014

TRUWORTHS INTERNATIONAL LTD
REGISTRATION NUMBER: 1944/017491/06
JSE CODE: TRU 
NSX CODE: TRW 
ISIN: ZAE000028296


PRELIMINARY REPORT ON THE AUDITED GROUP ANNUAL RESULTS
FOR THE 52 WEEKS ENDED 29 JUNE 2014 

FINANCIAL HIGHLIGHTS
Sale of merchandise up 7.1%
Gross margin at 55.9%
Operating margin at 32.1%
Annual dividend per share up 6.4%
Headline earnings per share up 1.1%
Fully diluted headline earnings per share up 1.5%
Cash flow per share up 16.8%


GROUP PROFILE
Truworths International Ltd is an investment holding and management company listed on 
the JSE and the Namibian Stock Exchange. Its principal trading entities, Truworths Ltd 
and Young Designers Emporium (Pty) Ltd, are engaged either directly or through agencies, 
franchises or subsidiaries, in the retailing of fashion apparel and related merchandise. 
Truworths International Ltd and its subsidiaries (the Group) operate primarily in 
South Africa, and elsewhere in sub-Saharan Africa. The Group is a credit retailer with 
over 70% of its sales on credit.

TRADING AND FINANCIAL PERFORMANCE 
The general economic environment during the 52-week period ended 29 June 2014 
("the reporting period") was characterised by pressure on consumers as a result of high 
levels of unemployment, industrial action, consumer credit retraction and increased 
basic living costs. Group retail sales for the reporting period increased by 6.8% to 
R10.8 billion compared to the 52-week prior reporting period ("the prior period") 
with cash sales growth of 11% and credit sales growth of 5%. The constrained credit 
sales growth is mainly a consequence of changes in the credit strategy implemented 
from the second half of calendar 2012 in response to the deteriorating credit environment. 
This resulted in lower account growth leading to the weaker credit sales growth. 
Like-for-like store retail sales grew by 0.6% while product inflation averaged 9% 
(2013: 2%) for the reporting period. Group sale of merchandise, which comprises Group 
retail sales and franchise sales less accounting adjustments, grew 7.1% to R10.5 billion.

Trading space increased by 10.3% over the prior period-end following the opening of a 
net 37 stores across the Group. The Group's store base totalled 641 (2013: 604) at the 
end of the reporting period. This includes 38 stores outside South Africa (2013: 40) 
after the closure of two stores in Lesotho.

Divisional sales                                   29 Jun        30 Jun      % change
                                                     2014          2013      on prior
                                                       Rm            Rm        period
Truworths ladieswear                                3 895         3 661             6
Truworths menswear                                  2 198         1 987            11
Identity                                            1 721         1 586             9
Daniel Hechter                                      1 202         1 206             -
Elements                                              510           480             6
LTD                                                   470           405            16
Inwear                                                450           451             -
Other*                                                316           298             6
Retail sales                                       10 762        10 074             7
Franchise sales                                         8             9           (11)
Accounting adjustments                               (312)         (318)           (2)
Sale of merchandise                                10 458         9 765             7
YDE agency sales                                      305           278            10
                              
* Includes cellular and Truworths Jewellery divisions.

The Group's gross margin decreased to 55.9% as a result of increased markdowns from 
56.6% for the prior period. It remains within the target range of 54% to 57%. Trading 
expenses increased 15% to R3.7 billion (2013: R3.2 billion), mainly as a result of a 
24% increase in trade receivable costs attributable to the challenging consumer credit 
environment, as well as a foreign exchange loss of R36 million (2013: foreign exchange 
gain of R47 million) arising from the marked-to-market adjustment on open forward 
exchange contracts. Trading expenses as a percentage of the sale of merchandise 
increased to 35.1% (2013: 32.8%). Interest received increased 13% to R917 million 
(2013: R814 million). 

Operating profit was unchanged at R3.4 billion and the operating margin declined to 
32.1% (2013: 34.5%) as a result of the reduced gross margin, the increase in trade 
receivable costs and the foreign exchange loss. If the foreign exchange losses and 
gains were to be excluded, the operating margin would have decreased to 32.4% 
(2013: 34.0%).

Inventory balances were 10% up at period-end, as a result of the store growth in the 
period, and inventory turn was 5.3 times based on stock levels at period-end 
(2013: 5.4 times).

A final dividend of 169 cents per share has been declared in respect of the reporting 
period, bringing the total dividend for the reporting period to 385 cents, an increase 
of 6.4% over the prior period. Dividend cover has been reduced to 1.5 times. 
Headline earnings per share (HEPS) increased 1.1% to 576.8 cents (2013: 570.8 cents). 
Fully diluted HEPS increased 1.5% to 569.3 cents (2013: 560.7 cents). 

The Group's financial position continued to strengthen, with net asset value per share 
increasing by 8% to 1 605.1 cents (2013: 1 489.7 cents). The returns on equity and 
assets, although high at 37% (2013: 39%) and 42% (2013: 46%) respectively, were lower 
than management's target range. Asset turnover remained at 1.3 times.

CREDIT MANAGEMENT 
Gross trade receivables grew by 12% to R4.7 billion. The growth is attributable to 
Group credit sales growing by 5% over the prior period, a continuing shift from 
six months interest-free to longer-term interest-bearing payment plans and the general 
deterioration in the credit environment. Credit sales contributed 71% (2013: 72%) to 
retail sales for the reporting period. At period-end it was encouraging to note that 
83% (2013: 82%) of the Group's active account holders were able to purchase because 
they were not in arrears, while the percentage of delinquent account balances has 
reduced year-on-year from 15.1% to 14.2% of trade receivables. 

In line with the board's outlook paragraph contained in the Group's unaudited interim 
results for the 26 weeks ended 29 December 2013, the trading environment remained 
challenging for the second half of the reporting period. This environment, coupled 
with the Group's restrictive credit granting criteria, has limited new account growth 
with the consequence that new account acceptance rates have decreased from 31% in the 
prior period (and 38% in the year prior to that) to 26%. This has resulted in the 
Group's active account base growing by 1% to 2.6 million accounts, impacting negatively 
on credit retail sales growth. 

Net bad debt as a percentage of gross trade receivables grew to 12.9% (2013: 10.4%). 
The doubtful debt allowance as a percentage of gross trade receivables has been 
increased to 12.5% (2013: 12.0%). Trade receivable costs have increased by 24% to 
R916 million (2013: R739 million). 

CAPITAL MANAGEMENT 
During the reporting period the Group generated R2.5 billion in cash from operations 
and this funded dividend payments (R1 566 million), capital expenditure (R289 million) 
and share buy-backs (R490 million). Cash and cash equivalents increased 20% to 
R1.6 billion at period-end.

SUCCESSION
The board advises that Michael Mark has served the Group as CEO for 23 years with 
distinction, leading it from a niche retailer to one of South Africa's most established 
and successful retailers. Shareholders were previously informed that his current 
three-year contract ends at 30 June 2015. The Group has embarked on a CEO succession 
process using external consultants to facilitate and support the board. Michael will 
continue in his role as CEO and continue to support the transition process for as long 
as is necessary. The succession process is well advanced. Michael will continue to serve 
as Chairman of the operating company, Truworths Ltd during the transition period, and 
will continue to serve on the Truworths International board. Further announcements will 
be made in due course.

OUTLOOK
Management remains committed to implementing the Group's business philosophy which 
has guided operating activities over many years. The supply of internationally 
inspired, high quality fashionable clothing to youthful South Africans continues to 
drive the Group's strategy and will remain the focus for the period ahead. Management 
is in the process of implementing various strategies to deal with changing consumer 
trends and the restrictive credit environment. 

The trading and credit environment is expected to remain challenging during the 
2015 financial period.

Capital expenditure of R448 million has been committed for the 2015 financial period 
and will be used primarily for store renovation and development (R356 million), new 
information systems infrastructure (R65 million) and further investment in 
distribution facilities (R17 million).

Group retail sales for the first seven weeks of the 2015 financial period increased 
by 8.7% over the corresponding seven weeks in the prior reporting period. 

Product inflation is anticipated to be between 5% and 6% during the 2015 reporting 
period and trading space is planned to grow by approximately 6%.


H Saven            MS Mark
Chairman           Chief Executive Officer


FINAL DIVIDEND
The directors of the company have resolved to declare a gross cash dividend from 
retained earnings in respect of the 52-week period ended 29 June 2014 in the amount 
of 169 cents (2013: 158 cents) per share to shareholders reflected in the company's 
register on the record date, being Friday, 12 September 2014.

The last day to trade in the company's shares cum dividend is Friday, 5 September 2014. 
Trading in the company's share ex dividend will commence on Monday, 8 September 2014. 
Consequently no dematerialisation or rematerialisation of the company's shares may 
take place over the period from Monday, 8 September 2014 to Friday, 12 September 2014, 
both days inclusive. The dividend will be payable in South African Rand on Monday, 
15 September 2014.

Dividends will be paid net of the 15% dividends tax, to be withheld and remitted to 
the South African Revenue Service. Such tax must be withheld unless beneficial owners 
of the dividend have provided the necessary documentary proof to the relevant 
regulated intermediary (being a broker, CSD participant, nominee company or the 
company's transfer secretaries Computershare Investor Services (Pty) Ltd, PO Box 61051, 
Marshalltown, 2107 South Africa) that they are exempt therefrom, or entitled to a 
reduced rate, as a result of a double taxation agreement between South Africa and the 
country of tax domicile of such owner. 

The dividends tax, if applicable at the rate of 15%, will result in a net cash dividend 
per share of 143.65 cents. No secondary tax on companies (STC) credits were utilised when 
determining the net dividend. The company has 422 638 973 ordinary shares in issue on 
21 August 2014.

In accordance with the company's recently adopted new memorandum of incorporation: 
-  the dividend will only be paid by electronic funds transfer, and no cheque payments 
   will be made. Accordingly, certificated shareholders who have not yet provided their 
   bank account details should do so by contacting the company's transfer secretaries; 
   and 
-  the directors have determined that gross dividends amounting to less than 1 000 cents, 
   due to any one shareholder of the company's shares held in certificated form, will not 
   be paid, unless otherwise requested in writing, but the net amount thereof will be 
   aggregated with other such net amounts and donated to a charity to be nominated by 
   the directors.

By order of the board


C Durham 
Company Secretary 

Cape Town
21 August 2014


ABRIDGED GROUP STATEMENTS OF FINANCIAL POSITION
                                               at 29 June    at 30 June     at 1 July
                                                     2014          2013          2012
                                                  Audited       Audited       Audited
                                                               Restated*     Restated*
                                                       Rm            Rm            Rm
ASSETS                                        
Non-current assets                                  1 360         1 280         1 197 
Property, plant and equipment                         934           857           775 
Goodwill                                               90            90            90 
Intangible assets                                     106           103            94 
Derivative financial assets                             6            19            34 
Available-for-sale assets                               9             4             3 
Loans and receivables                                  99           118           143 
Deferred tax                                          116            89            58 

Current assets                                      6 716         5 991         5 720 
Inventories                                           863           787           670 
Trade and other receivables                         4 182         3 766         3 421 
Derivative financial assets                             5            42             7 
Prepayments                                            78            71            62 
Cash and cash equivalents                           1 588         1 325         1 560 
Total assets                                        8 076         7 271         6 917 

EQUITY AND LIABILITIES
Total equity                                        6 642         6 224         5 986 
Share capital and premium                             368           293           205 
Treasury shares                                      (652)       (2 028)       (1 274)
Retained earnings                                   6 774         7 830         6 949 
Non-distributable reserves                            152           129           106 

Non-current liabilities                                88            96            95 
Post-retirement medical benefit obligation             51            48            42 
Leave pay obligation                                    3             4             3 
Cash-settled compensation obligation                    4             8            12 
Straight-line operating lease obligation               30            36            38 

Current liabilities                                 1 346           951           836 
Trade and other payables                            1 134           715           595 
Provisions                                             47            71            73 
Derivative financial liability                          8             -             -
Tax payable                                           157           165           168 

Total liabilities                                   1 434         1 047           931 
Total equity and liabilities                        8 076         7 271         6 917 

Number of shares in issue 
(net of treasury shares)          (millions)        413.8         417.8         424.0 
Net asset value per share            (cents)      1 605.1       1 489.7       1 411.8 

Key ratios
Return on equity                         (%)           37            39            40 
Before tax return on capital             (%)           52            55            58 
Before tax return on assets              (%)           42            46            46 
Inventory turn                       (times)          5.3           5.4           5.7 
Asset turnover                       (times)          1.3           1.3           1.3 
                                        
* Resulting from the adoption of new IFRS (refer to note 2).


ABRIDGED GROUP STATEMENTS OF COMPREHENSIVE INCOME
                                                 52 weeks                    52 weeks
                                               to 29 June                  to 30 June
                                                     2014                        2013
                                                  Audited             %       Audited
                                       Note            Rm        change            Rm
Revenue                                   3        11 642             8        10 809 

Sale of merchandise                                10 458             7         9 765 
Cost of sales                                      (4 617)                     (4 241)
Gross profit                                        5 841             6         5 524 
Other income                                          235                         226 
Trading expenses                                   (3 668)           15        (3 202)
Depreciation and amortisation                        (184)                       (160)
Employment costs                                   (1 024)                       (986)
Occupancy costs                                      (954)                       (843)
Trade receivable costs                               (916)                       (739)
Other operating costs                                (590)                       (474)
                                        
Trading profit                                      2 408            (5)        2 548 
Interest received                                     917                         814 
Dividends received                                     32                           4 
Profit before tax                                   3 357             -         3 366 
Tax expense                                          (951)                       (958)
Profit for the period, fully attributable to 
  shareholders of the company                       2 406             -         2 408 
                                        
Other comprehensive income to be reclassified 
  to profit or loss in subsequent periods              (3)                          - 
Movement in effective cash flow hedge                  (2)                         (3)
Fair value adjustment on personal lines 
  insurance business arrangement                        1                           - 
Deferred tax on movement in effective cash flow hedge  (2)                          4 
Movement in foreign currency translation reserve        -                          (1)
                                        
Other comprehensive income not to be reclassified 
  to profit or loss in subsequent periods               3                           - 
Remeasurement gains on defined benefit plans            3                           - 
                                        
Other comprehensive income for the period, 
  net of tax                                            -                           - 
                                        
Total comprehensive income for the period, fully 
  attributable to shareholders of the company       2 406                       2 408 
                                        
Basic earnings per share             (cents)        575.9             1         570.8 
Headline earnings per share          (cents)        576.8             1         570.8 
Fully diluted basic earnings 
  per share                          (cents)        568.4             1         560.7 
Fully diluted headline earnings 
  per share                          (cents)        569.3             2         560.7 
Weighted average number of shares (millions)        417.8                       421.9 
                                        
Key ratios                                        
Gross margin                             (%)         55.9                        56.6 
Trading expenses to sale of merchandise  (%)         35.1                        32.8 
Trading margin                           (%)         23.0                        26.1 
Operating margin                         (%)         32.1                        34.5


ABRIDGED GROUP STATEMENTS OF CHANGES IN EQUITY

                                Share                                Non-
                              capital                          distribut-
                                  and    Treasury    Retained        able       Total 
                              premium      shares    earnings    reserves      equity
                                   Rm          Rm          Rm          Rm          Rm
2014
Balance at the beginning of 
  the period*                     293      (2 028)      7 830         129       6 224 
Profit and total comprehensive 
  income for the period             -           -       2 409          (3)      2 406 
Profit for the period               -           -       2 406           -       2 406 
Other comprehensive income for 
  the period                        -           -           3          (3)          - 
Dividends                           -           -      (1 568)          -      (1 568)
Premium on shares issued           44           -           -           -          44 
Shares repurchased                  -        (490)          -           -        (490)
Shares repurchased and cancelled    -       1 897      (1 897)          -           - 
Shares issued in terms of the 
  restricted share scheme          31         (31)          -           -           - 
Share-based payments                -           -           -          26          26 
Balance at 29 June 2014           368        (652)      6 774         152       6 642 

2013
Balance at the beginning of 
  the period                      205      (1 274)      6 944         106       5 981 
Remeasurement gains on defined 
  benefit plans*                    -           -           5           -           5 
Audited restated balance at 
  the beginning of the period     205      (1 274)      6 949         106       5 986 
Profit and total comprehensive 
  income for the period             -           -       2 408           -       2 408 
Dividends                           -           -      (1 527)          -      (1 527)
Premium on shares issued 
  (includes R61 million in 
  respect of the restricted 
  share scheme)                    88           -           -           -          88 
Shares repurchased                  -        (691)          -           -        (691)
Shares issued in terms of the 
  restricted share scheme           -         (61)          -           -         (61)
Shares acquired upon forfeiture 
  of equity-based awards            -          (2)          -           -          (2)
Share-based payments                -           -           -          23          23 
Balance at 30 June 2013           293      (2 028)      7 830         129       6 224 
                                                  
* Resulting from the adoption of new IFRS (refer to note 2).
                                                  
Dividends (cents per share)                                        2014          2013
Final - payable/paid September                                      169           158
Interim - paid March                                                216           204
                                                                    385           362


ABRIDGED GROUP STATEMENTS OF CASH FLOWS
                                                               52 weeks      52 weeks
                                                             to 29 June    to 30 June
                                                                   2014          2013
                                                                Audited       Audited
                                                                     Rm            Rm
CASH FLOWS FROM OPERATING ACTIVITIES
Cash flow from trading and cash EBITDA*                           2 682         2 720 
Working capital movements                                          (105)         (352)
Cash generated from operations                                    2 577         2 368 
Interest received                                                   917           814 
Dividends received                                                   32             4 
Tax paid                                                           (984)         (988)
Cash inflow from operations                                       2 542         2 198 
Dividends paid                                                   (1 566)       (1 526)
Net cash from operating activities                                  976           672 
                              
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment to expand operations  (221)         (203)
Acquisition of plant and equipment to maintain operations           (54)          (50)
Acquisition of computer software                                    (14)          (17)
Proceeds on disposal of plant and equipment                           2             - 
Loans advanced                                                        -            (1)
Loans repaid                                                         21            29 
Acquisition of mutual fund units                                     (1)            - 
Net cash used in investing activities                              (267)         (242)
                              
CASH FLOWS FROM FINANCING ACTIVITIES                              
Proceeds on shares issued                                            44            27 
Shares repurchased by subsidiaries                                 (490)         (691)
Net cash used in financing activities                              (446)         (664)
                              
Net increase/(decrease) in cash and cash equivalents                263          (234)
Cash and cash equivalents at the beginning of the period          1 325         1 560 
Net foreign exchange difference                                       -            (1)
CASH AND CASH EQUIVALENTS AT THE REPORTING DATE                   1 588         1 325 
                              
Key ratios
Cash flow per share                                (cents)        608.4         521.0
Cash equivalent earnings per share                 (cents)        634.8         604.9
Cash realisation rate                                  (%)           96            86
                              
* Earnings before interest received, tax, depreciation and amortisation.


SELECTED EXPLANATORY NOTES
1  BASIS OF PREPARATION
   The information in this preliminary report has been extracted from the Group's 2014 
   annual financial statements. The preliminary report has been prepared in compliance 
   with International Financial Reporting Standards (IFRS), the SAICA Financial 
   Reporting Guides as issued by the Accounting Practices Committee, Financial 
   Reporting Pronouncements as issued by the Financial Reporting Standards Council, 
   IAS 34: Interim Financial Reporting, the South African Companies Act (71 of 2008, 
   as amended) and the Listings Requirements of the JSE.

   The Group's 2014 annual financial statements and this preliminary report have been 
   audited by the Group's external auditors, Ernst & Young Inc., and their unqualified 
   audit opinion on such financial statements and on this preliminary report are 
   available for inspection at the company's registered office. 

   The Group's 2014 annual financial statements have been prepared in accordance with 
   the going concern and historical cost bases except where otherwise indicated in the 
   Group's accounting policies. The accounting policies have been applied uniformly 
   throughout the Group and are consistent with those applied in the prior period, 
   except as mentioned in note 2. The presentation currency of the financial statements 
   is the South African Rand (R) and all amounts are rounded to the nearest million. 
   This preliminary report has been prepared under the supervision of DB Pfaff CA(SA), 
   the Chief Financial Officer of the Group.

2  ACCOUNTING POLICIES
   The accounting policies and methods of computation applied in the preparation of 
   the Group's 2014 annual financial statements are consistent with those applied in 
   the preparation of the Group's annual financial statements for the period ended 
   30 June 2013, except for the changes resulting from the adoption of the statements 
   as described below:

   IFRS 10: Consolidated Financial Statements
   This standard establishes a single control model that applies to all entities 
   including special purpose entities. It amends the definition of control to include 
   three elements, namely power over an investee, exposure or rights to variable 
   returns of the investee and the ability to use power over the investee to affect 
   the investor's returns.

   The Group has performed the necessary assessments and applied the principles to all 
   interests in other entities which could be considered to fall within the scope of 
   the new standard, and has concluded that it is not required to consolidate or 
   deconsolidate any such interests at the reporting date. However, the Group has 
   included these interests in the statement of financial position as available-for-sale 
   investments, where appropriate. This standard has not had any material impact on the 
   financial position and financial performance of the Group. 

   IFRS 12: Disclosure of Interest in Other Entities
   This standard consolidates all of the disclosures that were previously in 
   IAS 27: Consolidated and Separate Financial Statements, as well as all of the 
   disclosures that were previously included in IAS 31: Investments in Joint Ventures 
   and IAS 28: Investments in Associates. The new standard increases transparency in 
   financial reporting where the reporting entity has an interest in subsidiaries, 
   joint arrangements, associates and/or unconsolidated structured entities. 

   The adoption of this standard has resulted in additional disclosures in relation 
   to the Group's interests in entities other than subsidiaries. 

   IFRS 13: Fair Value Measurement
   This standard establishes a single source of guidance under IFRS for all fair value 
   measurements and defines fair value as an exit price. 

   The adoption of this standard has resulted in additional disclosures, but has not 
   had any material impact on the financial position or performance of the Group. 

   IAS 19: Employee Benefits (Revised) 
   Revisions to this standard include significant changes to the accounting for pension 
   and post-retirement benefit plans and various other minor changes. Of these changes, 
   the most fundamental is the removal of the corridor mechanism for recognising 
   actuarial gains and losses. In terms of the revised standard all actuarial surpluses 
   and deficits are recognised in the statement of financial position and other 
   comprehensive income and are not deferred. The revised standard was applied 
   retrospectively in accordance with the requirements of IAS 8: Accounting Policies - 
   Changes in Accounting Estimates and Errors, resulting in the restatement of all 
   affected opening comparative balances of the 2013 reporting period. 

   This has resulted in the recognition of the previously unrecognised actuarial gain 
   in relation to the Group's post-retirement medical benefit obligation of R5 million 
   directly in other comprehensive income. All actuarial gains and losses arising after 
   this date are also recognised directly in other comprehensive income in the period 
   they arise. 

   The revised standard also requires short-term employee benefits to be classified as 
   such, based on the expected timing of settlement rather than employee entitlement. 

   This has resulted in the reclassification of R3 million of the opening comparative 
   balance of the 2013 reporting period of the Group's leave pay obligation from 
   short-term employee benefits to other long-term employee benefits. Changes in the 
   carrying amount of liabilities for other long-term employment benefits continue to 
   be recognised in profit or loss.

   Other IFRS amendments and International Financial Reporting Interpretations 
   Committee (IFRIC) interpretations 
   Various other new and amended IFRS and IFRIC interpretations that have been issued 
   are effective but are not applicable to the Group's activities.

                                                 52 weeks                    52 weeks
                                               to 29 June                  to 30 June
                                                     2014                        2013
                                                  Audited             %       Audited
                                                       Rm        change            Rm
3  REVENUE                              
   Sale of merchandise                             10 458            7          9 765 
   Retail sales                                    10 762                      10 074 
   Accounting adjustments*                           (312)                       (318)
   Franchise sales                                      8                           9 
   Interest received                                  917            13           814 
   Trade receivables interest                         828                         724 
   Investment interest                                 89                          90 
   Other income                                       235            4            226 
   Commission                                         118                         112 
   Display fees                                        53                          48 
   Financial services income                           50                          51 
   Lease rental income                                  7                           7 
   Other                                                6                           6 
   Royalties                                            1                           2 
   Dividends received                                  32                           4 
   Dividends received from dissolution of 
     an insurance cell captive                         29                           - 
   Dividends received from insurance 
     business arrangements                              3                           4 
   Total revenue                                   11 642             8        10 809 
                                        
   * Accounting adjustments made in terms of IFRS and generally accepted accounting 
     practice relating to promotional vouchers, staff discounts on merchandise purchases, 
     cellular retail sales, notional interest on non-interest-bearing trade receivables 
     and the sales returns provision.                              

                                                 52 weeks                    52 weeks
                                               to 29 June                  to 30 June
                                                     2014                        2013
                                                  Audited             %       Audited
                                                       Rm        change            Rm
4  RECONCILIATION OF PROFIT FOR THE PERIOD 
      TO HEADLINE EARNINGS
   Profit for the period, fully attributable 
      to shareholders of the company                2 406                       2 408 
   Adjusted for:                              
   Loss on disposal of plant and equipment              4                           - 
   Headline earnings                                2 410             -         2 408


5  SEGMENT REPORTING
   The Group's reportable segments have been identified as the Truworths and Young 
   Designers Emporium (YDE) business units. The Truworths business unit comprises all 
   the retailing activities conducted by the Group, through which the Group retails 
   fashion apparel comprising clothing, footwear and other fashion products to women, 
   men and children, other than by the YDE business unit. The YDE business unit 
   comprises the agency activities through which the Group retails clothing, footwear 
   and related products on behalf of emerging South African designers.

   Management monitors the operating results of the business segments separately for 
   the purpose of making decisions about resources to be allocated and of assessing 
   performance. Segment performance is reported on an IFRS basis and evaluated based 
   on revenue and profit before tax.

                                                          Consolidation
                                  Truworths           YDE       entries         Group
                                         Rm            Rm            Rm            Rm
   2014                                                  
   Total third party revenue         11 519           123             -        11 642 
   Third party                       11 485           123            34        11 642 
   Inter-segment                         34             -           (34)            - 
   Depreciation and amortisation        179             5             -           184 
   Employment costs                   1 005            14             5         1 024 
   Occupancy costs                      917            37             -           954 
   Trade receivable costs               916             -             -           916 
   Other costs                          613            15           (38)          590 
   Interest received                    913             2             2           917 

   Profit for the period              2 334            38            34         2 406 
   Profit before tax                  3 271            52            34         3 357 
   Tax expense                         (937)          (14)            -          (951)

   Segment assets                    11 372           197        (3 493)        8 076 
   Segment liabilities                1 563             7          (136)        1 434 
   Capital expenditure                  283             6             -           289 

   Gross margin            (%)         55.9             -             -          55.9 
   Trading margin          (%)         22.5          41.5             -          23.0 
   Operating margin        (%)         31.3          43.1             -          32.1 
   Inventory turn      (times)          5.3             -             -           5.3 
   Credit:cash sales mix   (%)        71:29         24:76             -         71:29 

   2013
   Total third party revenue         10 722           111           (24)       10 809 
   Third party                       10 691           111             7        10 809 
   Inter-segment                         31             -           (31)            - 
   Depreciation and amortisation        156             4             -           160 
   Employment costs                     973            13             -           986 
   Occupancy costs                      810            33             -           843 
   Trade receivable costs               739             -             -           739 
   Other costs                          493            15           (34)          474 
   Interest received                    810             1             3           814 

   Profit for the period              2 367            32             9         2 408 
   Profit before tax                  3 312            45             9         3 366 
   Tax expense                         (945)          (13)            -          (958)

   Segment assets                    10 125           154        (3 008)        7 271 
   Segment liabilities*               1 149             1          (103)        1 047 
   Capital expenditure                  268             2             -           270 

   Gross margin            (%)         56.6             -             -          56.6 
   Trading margin          (%)         25.6          39.7             -          26.1 
   Operating margin        (%)         33.9          40.8             -          34.5 
   Inventory turn      (times)          5.4             -             -           5.4 
   Credit:cash sales mix   (%)        72:28         25:75             -         72:28 

   * Resulting from the adoption of new IFRS (refer to note 2).

                                   Contribution to revenue     Contribution to revenue
                                       2014          2014          2013          2013
                                         Rm             %            Rm             %
   Third party revenue
   South Africa                      11 219          96.4        10 460          96.8 
   Namibia                              201           1.7           171           1.6 
   Swaziland                             70           0.6            52           0.5 
   Botswana                              63           0.5            49           0.5 
   Zambia                                20           0.2            16           0.1 
   Nigeria                               19           0.2            16           0.1 
   Ghana                                 17           0.1            14           0.1 
   Lesotho                               15           0.1            13           0.1 
   Mauritius                             10           0.1             9           0.1 
   Franchise sales                        8           0.1             9           0.1 
   Kenya                                  8           0.1             8           0.1 
   Lesotho                                -             -             1             -
   Total third party revenue         11 642           100        10 809           100


                                                                29 June       30 June
                                                                   2014          2013
                                                                Audited       Audited
                                                                     Rm            Rm
6  CAPITAL COMMITMENTS                    
   Capital expenditure authorised but not contracted:
   Store renovation and development                                 356           259
   Computer infrastructure                                           65            59
   Distribution facilities                                           17            60
   Head office refurbishment                                          7             4
   Motor vehicles                                                     3             6
   Total capital commitments                                        448           388

   The capital commitments will be financed from cash generated from operations and 
   available cash resources and are expected to be incurred in the 2015 reporting period.


7  EVENTS AFTER THE REPORTING DATE
   No event, material to the understanding of this preliminary report, has occurred 
   between the reporting date and the date of approval of the report.


CORPORATE INFORMATION
Truworths International Ltd: Registration number: 1944/017491/06
Tax reference number: 9875/145/71/7
JSE code: TRU 
NSX code: TRW 
ISIN: ZAE000028296

Registered office: No. 1 Mostert Street, Cape Town, 8001, South Africa;  
PO Box 600, Cape Town, 8000, South Africa

Sponsor in South Africa: One Capital 
Sponsor in Namibia: Old Mutual Investment Services (Namibia) (Pty) Ltd

Auditors: Ernst & Young Inc.

Transfer secretaries: Computershare Investor Services (Pty) Ltd, 
70 Marshall Street, Johannesburg, 2001, South Africa;  
PO Box 61051, Marshalltown, 2107, South Africa; 
or Transfer Secretaries (Pty) Ltd, Robert Mugabe Avenue No. 4 Windhoek, Namibia; 
PO Box 2401, Windhoek, Namibia

Company Secretary: C Durham

Directors: H Saven (Chairman)§‡, MS Mark (CEO)*, DB Pfaff (CFO)*, RG Dow§‡, 
KI Mampeule§‡, CT Ndlovu§‡, RJA Sparks§‡, AJ Taylor§‡ and MA Thompson§‡
* Executive § Non-executive ‡ Independent

Website: www.truworths.co.za

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