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Chief financial officer’s reportSTATEMENTS OF FINANCIALPOSITIONThe Group’s financial position continued tostrengthen over the period, with net asset value pershare increasing 18% to 1 410.6 cents.The return on equity at 40% and return on assetsat 46% were within the targeted performance range,with asset turnover remaining at 1.3 times.Non-current assetsNon-current assets increased 10% to R1.2 billion(2011: R1.1 billion).• Property, plant and equipment increased by 7%.Capital expenditure, excluding intangible assets, forthe period was R203 million (2011: R169 million).• Intangible assets increased by R17 million owingprincipally to the purchase of computer softwareof R23 million.• Loans and receivables increased marginally toR143 million, with the granting of loans to certainshare incentive scheme participants largely beingoffset by the settlement of such loans.• The deferred tax asset increased from R39 millionto R58 million mainly as a result of the increase inthe doubtful debt allowance.Current assetsCurrent assets increased by 11% to R5.7 billion(2011: R5.1 billion).• Gross inventories were 22% higher at periodenddue to increased levels of future seasoninventory on hand, additional inventory for Africanexpansion and the timing of the period-end withthe 53 rd trading week. The increased inventorylevels resulted in the inventory turn reducing to5.7 times from the 6.4 times reported in the priorperiod and being outside of the target range of6.0 to 6.5 times. If the increased levels of futureseason deliveries were excluded, the inventoryturn would have been 6.1 times. Inventory turnhas averaged 6.3 times over the past five years.• Trade and other receivables increased 13%to R3.4 billion (2011: R3.0 billion). This isattributable to an increase of 16% in credit saleswhich resulted in a shift in the credit to cashsales mix from 71% to 73%, and the continuedmovement by customers to longer-term interestbearingpayment plans. This was partially offsetby additional collections against the debtors’book arising during the 53 rd trading week.• Cash and cash equivalents grew by R71 millionto R1.6 billion (2011: R1.5 billion). Duringthe period the Group generated R1.6 billion(2011: R1.7 billion) in cash from operatingactivities. This was used primarily for dividendpayments (R1.3 billion), share buy-backs(R83 million), investment in store development(R162 million), computer infrastructure andtechnology (R38 million) and distribution facilities(R23 million, including R18 million for land andbuildings purchased).Total equity and liabilitiesThe return on equity and capital at 40% and 58%respectively, were slightly down on the 41% and61% reported in the prior period.Total equityShare capital and share premium increased byR46 million (2011: R80 million) following the issue of1.8 million shares at an average price of R25.14 pershare pursuant to the exercise of options by sharescheme participants.During the financial period the Group repurchased1.2 million shares at an average cost of R69.03per share at a total cost of R83 million. Refer tothe section on Capital Management on page 58 forfurther details on share buy-backs.Total liabilitiesTotal liabilities were R242 million lower at R936 millionat period-end.• Non-current liabilities increased by R13 milliondue to the net effect of an increase in the postretirementmedical benefit obligation of R6 millionand a net R11 million increase in the cash-settledcompensation liability, offset by a R4 milliondecrease in the straight-line operating leaseobligation.• Current liabilities decreased by R255 millionmainly due to the timing of the period-end withthe 53 rd trading week, resulting in month-endpayments reducing creditor balances.56<strong>Truworths</strong> International Limited Integrated Annual Report 2012
STATEMENTS OF CASH FLOWSCash and cash equivalents increased by R71 millionto R1.56 billion (2011: R1.49 billion) at the end ofthe period, with cash generated from operationsdecreasing 7% to R1.85 billion (2011: R1.98 billion).Cash flow from trading and cash earnings beforeinterest received, tax, depreciation and amortisationincreased 10% to R2.7 billion (2011: R2.4 billion).Movements in working capital reflected an outflow ofR802 million compared to an outflow of R425 millionin the prior period. The increase in working capitalis primarily due to the additional trading week inthe 2012 reporting period. Inventories thereforeincreased by R140 million (2011: R80 million), tradeand other receivables increased by R399 million(2011: R475 million) while trade and other payablesdecreased by R263 million (2011: increase ofR130 million).Tax paid in the current period increased 8% fromR895 million to R964 million. This lower than normalgrowth is partly due to the abolishment of STC.Cash dividend payments during the period increasedby 32% to R1.28 billion (2011: R0.97 billion) owing toincreased profitability and the decrease in the dividendcover.Net cash used in investing activities totalledR229 million compared with R275 million in 2011.This was primarily due to the net effect of capitalexpenditure being R40 million higher, no purchasesof high performance share scheme options in theperiod (2011: R31 million) and R15 million loansissued to share incentive scheme participants(2011: R63 million) in the current period.Net cash used in financing activities amounted toR37 million compared to R314 million in the priorperiod, in part due to limited share buy-back activity.Cash flow per share decreased 6% to 382.7 centswhile cash and cash equivalent earnings per shareincreased 13% to 565.8 cents. This translated into alower cash realisation rate of 68% compared to 81%in 2011, resulting from the higher levels of workingcapital outflows.The Group’s free cash flow totalled R1.6 billion(2011: R1.7 billion). The cash flow analysis graphbelow, details the cash generated by the Groupand how the cash was deployed during the period.Free cash flow is commonly used to describe theremaining cash which can be used for future growthor returned to shareholders as dividends or throughshare buy-backs.CASH FLOW ANALYSIS3 0002 653 802728 3 9642 5002 000371 581 1 2811 500R’MILLION1 0001895008343 71EBITDAWorking capitalmovementInterestreceivedDividendsreceivedTax paidCapexmaintenanceFree cashflowDividendspaidCapexexpandSharebuy-backsOtherNet cashflow<strong>Truworths</strong> International Limited Integrated Annual Report 2012 57
Page 3 and 4: IntroductionIn the 2012 financial p
Page 5 and 6: ANALYSIS OF FINANCIAL PERFORMANCEIn
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Page 25: EXTRACT FROM SHAREHOLDERINFORMATION

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