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STEERS HOLDINGS LIMITED
(LNCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 1969/004873/06)
("THE COMPANY")
UNAUDITED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2000
GROSS REVENUE +4%
OPERATING PROFIT +9%
EARNINGS PER SHARE -4%
HEADLINE EARNINGS PER SHARE -10%
OVERVIEW
DURING THE SIX MONTHS UNDER REVIEW, THE GROUP CONTINUED TO HOLD THE NUMBER ONE
POSITIONS IN THE SOUTH AFRICAN HAMBURGER AND PIZZA MARKETS. THE GROUP'S
STRATEGIC INTENT IS TO REMAIN THE LEADING MARKETER AND DEVELOPER OF BRANDED
FAST FOOD CONCEPTS IN AFRICA.
FINANCIAL RESULTS
DURING THE SIX MONTHS UNDER REVIEW, GROSS REVENUE INCREASED BY 4% FROM R123,6
MILLION TO R128,7 MILLION. OPERATING PROFIT INCREASED BY 9% FROM R10,2 MILLION
TO R11,1 MILLION. HEADLINE EARNINGS PER SHARE DECREASED FROM 11,8 CENTS TO 10,6
CENTS.
THE LOWER THAN EXPECTED GROWTH IN TURNOVER WAS PRIMARILY DUE TO DELAYS IN NEW
STORE OPENINGS, WHICH ARE NOW SCHEDULED FOR THE FOLLOWING SIX MONTHS, AND
REDUCED CONSUMER SPENDING. THE OPERATING MARGIN IMPROVED SLIGHTLY, MAINLY AS A
RESULT OF THE GROUP'S ABILITY TO CONTAIN OVERHEADS. THE DECLINE IN EARNINGS IS
MAINLY DUE TO HIGHER INTEREST AND TAXATION CHARGES.
ACQUISITIONS
DURING THE SIX MONTHS UNDER REVIEW, STEERS HOLDINGS ACQUIRED OCEAN BASKET'S 49%
STAKE IN FISHAWAYS, THE JOINT VENTURE SET UP BY THE TWO COMPANIES IN 1999,
MAKING FISHAWAYS A WHOLLY-OWNED SUBSIDIARY.
DIVISIONAL RESULTS
THE GROUP'S MAIN BUSINESS IS FAST FOOD FRANCHISING. ITS PRIMARY BUSINESS
SEGMENTS ARE:
* FRANCHISING OF FAST FOOD BRANDS, NAMELY STEERS, DEBONAIRS PIZZA AND
FISHAWAYS, ALSO INCORPORATING GROUP-OWNED FAST FOOD OUTLETS
* MANUFACTURING AND DISTRIBUTION OF FOOD AND RELATED PRODUCTS TO FRANCHISEES
AND THE RETAIL TRADE. THIS DIVISION ALSO INCLUDES THE GROUP'S STORE DEVELOPMENT
BUSINESS UNIT
* OTHER (INCORPORATING THE GROUP'S MANAGEMENT SUPPORT SERVICES) CONTRIBUTIONS
TO THE RESULTS FROM THE ABOVE SEGMENTS DURING THE PERIOD WERE AS FOLLOWS:
SEGMENTAL INFORMATION
SIX MONTHS TO 31 AUGUST 2000
GROSS REVENUE
2000 1999 GROWTH
R000 R000 %
FRANCHISING 37 829 33 211 13,9
MANUFACTURING AND DISTRIBUTION 92 391 93 590 (1,3)
OTHER 17 707 8 695 103,6
ELIMINATIONS (19 252) (11 872) (62,2)
128 675 123 624 4,1
OPERATING PROFIT
2000 1999 GROWTH
R000 R000 %
FRANCHISING 9 519 8 424 13,0
MANUFACTURING AND DISTRIBUTION 9 270 9 674 (4,2)
OTHER 7 539 (669) 1 226,9
ELIMINATIONS (15 200) (7 196) 111,2
11 128 10 233 8,7
NOTE
IN LINE WITH THE GROUP'S REVISED MANAGEMENT STRUCTURES, THE FOLLOWING CHANGES
HAVE BEEN MADE TO THE ABOVE SEGMENTS (WITH APPROPRIATE ADJUSTMENTS TO
COMPARATIVE FIGURES):
* THE STORE DEVELOPMENT BUSINESS UNIT HAS BEEN TRANSFERRED FROM FRANCHISING TO
MANUFACTURING AND DISTRIBUTION
* THE GROUP-OWNED STORE PORTFOLIO HAS BEEN TRANSFERRED FROM OTHER TO
FRANCHISING
FRANCHISING
OUTLETS IN OPERATION AS AT 31 AUGUST 2000
BRAND SOUTH AFRICA REST OF AFRICA TOTAL
STEERS 256 32 288
DEBONAIRS PIZZA 116 13 129
FISHAWAYS 3 0 3
STEERS
DURING THE SIX MONTHS UNDER REVIEW, THE OVERALL IN-STORE TURNOVER FOR THE
STEERS BRAND GREW BY 7%, REFLECTING LIMITED NET NEW STORE GROWTH AND REDUCED
CONSUMER SPENDING. STEERS WILL OPEN 31 NEW STORES IN SOUTH AFRICA DURING THE
CURRENT FINANCIAL YEAR. WITH INCREASED TRADING ACTIVITY TRADITIONALLY
EXPERIENCED IN THE NEXT SIX-MONTH PERIOD, IN-STORE TURNOVERS ARE EXPECTED TO
IMPROVE FROM CURRENT LEVELS. A REVISED LONG-TERM STRATEGY FOR THE BRAND IS
BEING FORMULATED BASED ON DEVELOPMENTS IN THE SOUTH AFRICAN MARKET PLACE AND
BENCHMARKING AGAINST GLOBAL STANDARDS.
DEBONAIRS PIZZA
THE UNPRECEDENTED GROWTH OF THE DEBONAIRS PIZZA BRAND IS DUE TO A FOCUSED
STRATEGY AND A STRONG MANAGEMENT TEAM. OVERALL IN-STORE TURNOVER GREW BY 57%.
DEBONAIRS PIZZA WILL ADD 21 NEW STORES TO ITS SOUTH AFRICAN STORE POPULATION
DURING THE CURRENT FINANCIAL YEAR. THE STRATEGY OF "MOVING QUICKLY" IN TERMS OF
SERVICE AND KEEPING UP WITH MARKET TRENDS, CONTINUES TO CONTRIBUTE TO
FRANCHISEE PROFITABILITY.
FISHAWAYS
CHANGES IN OWNERSHIP AND MANAGEMENT STRUCTURES HAVE RESULTED IN DELAYS IN NEW
STORE OPENINGS. HOWEVER, BRAND DEVELOPMENT AND EXPANSION STRATEGIES HAVE BEEN
FORMALISED AND THE BRAND IS NOW SET FOR FUTURE GROWTH. FISHAWAYS WILL ADD FIVE
NEW STORES IN SOUTH AFRICA DURING THE CURRENT FINANCIAL YEAR.
INTERNATIONAL FRANCHISING
THE GROUP CONTINUES TO EXPAND SUCCESSFULLY INTO AFRICA, WHERE GROWTH HAS BEEN
FACILITATED THROUGH A COMBINATION OF MASTER LICENCES AND FRANCHISE
ARRANGEMENTS. AT 31 AUGUST 2000, STEERS HOLDINGS WAS REPRESENTED BY 45 STORES
IN 14 COUNTRIES BEYOND SOUTH AFRICA. THE GROUP CONTINUES TO ACHIEVE ITS
OBJECTIVES OF INCREASING THE NUMBER OF OUTLETS IN THESE TERRITORIES AND
EXPANDING INTO ATTRACTIVE NEW MARKETS ON THE CONTINENT. EXPERIENCE TO DATE HAS
SHOWN THAT THESE OUTLETS TYPICALLY GENERATE SUBSTANTIALLY HIGHER TURNOVERS THAN
EQUIVALENT LOCAL STORES. DURING THE CURRENT FINANCIAL YEAR, 17 NEW STORES WILL
BE OPENED OUTSIDE SOUTH AFRICA.
GROUP-OWNED STORES
IN LINE WITH THE GROUP'S POLICY OF REDUCING ITS PORTFOLIO OF GROUP-OWNED
STORES, THREE STORES WERE SOLD TO FRANCHISEES DURING THE SIX MONTH PERIOD UNDER
REVIEW. IT IS EXPECTED THAT NO MORE THAN THREE STORES WILL REMAIN IN THE
GROUP'S PORTFOLIO BY 28 FEBRUARY 2001.
MANUFACTURING AND DISTRIBUTION
WHOLESALE
THE WHOLESALE BUSINESS UNIT MANUFACTURES AND SOURCES PRODUCTS FOR THE
FRANCHISED OUTLETS. THIS BUSINESS UNIT ACHIEVED A 14% INCREASE IN GROSS
REVENUE. GROWTH HAS, HOWEVER, BEEN CURTAILED BY DELAYED STORE OPENINGS AND
REDUCED CONSUMER SPENDING.
STEERS RETAIL PRODUCTS
THE STEERS RETAIL PRODUCTS BUSINESS UNIT EXPERIENCED A VERY PLEASING 23% GROWTH
IN GROSS REVENUE DURING THE SIX MONTHS UNDER REVIEW. EXPORT ORDERS RECEIVED
PROVIDE ENCOURAGING SIGNALS FOR FUTURE GROWTH, ESPECIALLY IN COUNTRIES WHERE
STEERS AND DEBONAIRS PIZZA OUTLETS HAVE BEEN ESTABLISHED.
POUYOUKAS FOODS
POUYOUKAS FOODS ACHIEVED AN ENCOURAGING 12% GROWTH IN GROSS REVENUE DURING THE
PERIOD UNDER REVIEW. THIS BUSINESS UNIT PROVIDES A RANGE OF WHOLESOME FOOD
PRODUCTS TO NATIONAL SUPERMARKET CHAINS AND ALSO SOURCES PRODUCTS FOR THE
WHOLESALE BUSINESS UNIT.
STORE DEVELOPMENT
THE RESULTS OF THIS BUSINESS UNIT WERE SIGNIFICANTLY AFFECTED BY DELAYS IN
STORE OPENINGS.
PROSPECTS
MANAGEMENT IS CONFIDENT THAT THE COMBINATION OF NEW STORE OPENINGS THAT WILL
TAKE PLACE IN THE SECOND HALF OF THE FINANCIAL YEAR, AND THE INCREASED TRADING
ACTIVITIES OVER THE FESTIVE SEASON, WILL RESULT IN THE GROUP SHOWING POSITIVE
EARNINGS GROWTH FOR THE YEAR ENDING 28 FEBRUARY 2001.
DIVIDENDS
NOTICE IS HEREBY GIVEN THAT AN INTERIM DIVIDEND (NUMBER 16) OF 5 CENTS PER
ORDINARY SHARE HAS BEEN PROPOSED BY THE DIRECTORS. THE DIVIDEND WILL BE PAYABLE
TO ALL SHAREHOLDERS REGISTERED IN THE BOOKS OF THE COMPANY AS AT THE CLOSE OF
BUSINESS ON 3 NOVEMBER 2000. THE DIVIDEND WILL BE PAYABLE ON OR ABOUT 10
NOVEMBER 2000.
ON BEHALF OF THE BOARD
JL HALAMANDRES
DEPUTY CHAIRMAN
19 OCTOBER 2000
CONSOLIDATED INCOME STATEMENT
SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
31.08.00 31.08.99 %
29.02.00
R000 R000 CHANGE R000
GROSS REVENUE 128 675 123 624 4 260 816
OPERATING PROFIT BEFORE DEPRECIATION 14 574 13 447 8 33 082
DEPRECIATION (3 445) (3 214) (7 052)
OPERATING PROFIT 11 129 10 233 9 26 030
NET INTEREST PAID (924) (423) (1 473)
NET INCOME BEFORE TAXATION 10 205 9 810 4 24 557
TAXATION (3 153) (2 446) (8 886)
NET INCOME AFTER TAXATION 7 052 7 364 (4) 15 671
ATTRIBUTABLE TO OUTSIDE SHAREHOLDERS 101 13 119
ATTRIBUTABLE PROFIT 7 153 7 377 (3) 15 790
WEIGHTED AVERAGE NUMBER OF SHARES IN
ISSUE 62 583 106 62 088 106 62 247 696
OPERATING MARGIN 8,7% 8,3% 5 10,0%
EARNINGS PER SHARE - CENTS 11,4 11,9 (4) 25,2
HEADLINE EARNINGS PER SHARE - CENTS 10,6 11,8 (10) 24
CONSOLIDATED BALANCE SHEET
AT AT YEAR ENDED
31 AUGUST 31 AUGUST 29 FEBRUARY
2000 1999 2000
R000 R000 R000
ASSETS
NON-CURRENT ASSETS 52 228 57 482 55 706
TANGIBLE FIXED ASSETS 14 532 17 901 16 681
INTANGIBLE FIXED ASSETS 31 966 33 591 32 601
LOANS 5 730 5 990 6 424
CURRENT ASSETS 44 821 44 048 44 757
INVENTORY 13 594 15 731 14 169
ACCOUNTS RECEIVABLE 31 227 28 317 30 588
TOTAL ASSETS 97 049 101 530 100 463
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES 65 574 56 899 58 500
ORDINARY SHAREHOLDERS' INTEREST 64 947 56 481 57 839
OUTSIDE SHAREHOLDERS' INTEREST 627 418 661
NON-CURRENT LIABILITIES 7 568 11 701 10 954
LONG-TERM LIABILITIES 6 259 11 247 9 568
DEFERRED TAXATION 1 309 454 1 386
CURRENT LIABILITIES 23 907 32 930 31 009
ACCOUNTS PAYABLE 20 305 24 056 20 727
SHAREHOLDERS FOR DIVIDEND - - 4 748
SOUTH AFRICAN REVENUE SERVICE 2 694 1 532 2 482
BANK OVERDRAFT 908 7 342 3 052
TOTAL EQUITY AND LIABILITIES 97 049 101 530 100 463
STATEMENT OF CHANGES IN EQUITY
SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
31.08.00 31.08.99 29.02.00
R000 R000 R000
BALANCE AT START OF PERIOD 57 462 51 917 51 917
CHANGE IN ACCOUNTING POLICIES 0 (2 813) (2 813)
RESTATED BALANCE 57 462 49 104 49 104
NET GAINS NOT RECOGNISED IN THE
INCOME STATEMENT - CURRENCY
TRANSLATION DIFFERENCES 332 0 171
ATTRIBUTABLE EARNINGS 7 153 7 377 15 790
DIVIDENDS 0 0 (7 485)
NET MOVEMENT IN SHARE CAPITAL 0 0 312
NET MOVEMENT IN SHARE PREMIUM 0 0 (53)
BALANCE AT END OF PERIOD 64 947 56 481 57 839
CONSOLIDATED CASH FLOW STATEMENT
SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
31.08.00 31.08.99 29.02.00
R000 R000 R000
NET CASH FLOW FROM
OPERATING ACTIVITIES 4 551 3 569 10 151
CASH GENERATED BY OPERATIONS 12 710 9 412 24 339
NET INTEREST PAID (924) (423) (1 473)
TAXATION PAID (2 854) (1 978) (6 536)
DIVIDENDS PAID (4 381) (3 442) (6 179)
NET CASH FLOW FROM INVESTING
ACTIVITIES 1 121 (1 108) (1 801)
EXPENDED ON NON-CURRENT ASSETS (733) (3 492) (10 038)
PROCEEDS FROM DISPOSAL OF
NON-CURRENT ASSETS 1 854 2 384 8 237
NET CASH INFLOW FROM FINANCING
ACTIVITIES (3 528) (7 597) (9 196)
(DECREASE)/INCREASE IN SHARE
CAPITAL AND RESERVES 67 (1 481) (873)
DECREASE IN LONG-TERM
LIABILITIES (3 595) (6 116) (8 323)
CHANGE IN CASH AND CASH
EQUIVALENTS 2 144 (5 136) (846)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR (3 052) (2 206) (2 206)
CASH AND CASH EQUIVALENTS AT
END OF YEAR (908) (7 342) (3 052)
CHANGE IN ACCOUNTING POLICIES
1 ACCOUNTING FOR FRANCHISE FEES ON THE ACCRUAL BASIS
DUE TO THE NATURE OF THE FRANCHISEES' OPERATIONS, IT WAS PREVIOUSLY CONSIDERED
IMPRACTICAL TO DETERMINE THE EXACT VALUE OF THE ECONOMIC BENEFIT F FRANCHISE
FEES AND ADVERTISING LEVIES UNTIL RECEIVED. THE GROUP HAS RECENTLY INSTITUTED
IMPROVED SYSTEMS AND PROCESSES AROUND FRANCHISEE TURNOVER DECLARATIONS AND
FRANCHISEE FEE AND ADVERTISING LEVY COLLECTIONS.
ACCORDINGLY IT HAS CHANGED ITS ACCOUNTING POLICY TO ACCOUNT FOR FRANCHISE FEES
AND ADVERTISING LEVIES ON AN ACCRUAL BASIS. THE COMPARATIVE AMOUNTS HAVE BEEN
APPROPRIATELY RESTATED. THE EFFECT OF THE CHANGE IS:
(DECREASE)/INCREASE IN NET INCOME DUE TO CHANGE IN ACCOUNTING FOR FRANCHISE
FEES:
SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
31.08.00 31.08.99 29.02.00
R000 R000 R000
- GROSS (698) (641) 1 063
- TAXATION 210 192 (319)
- NET (488) (449) 744
RESTATEMENT OF OPENING RETAINED EARNINGS IN RESPECT OF PRIOR YEAR
ADJUSTMENT:
- GROSS 618 (445) (445)
- TAXATION (186) 133 133
- NET 432 (312) (312)
2 ACCOUNTING FOR JOINING FEES ON THE ACCRUAL BASIS
THE GROUP PREVIOUSLY ACCOUNTED FOR FRANCHISEE JOINING FEES ON A RECEIPT BASIS.
JOINING FEES WILL NOW BE ACCOUNTED FOR ON THE ACCRUAL BASIS, WITH THE TIME OF
ACCRUAL BEING WHEN A NEW STORE OPENS. JOINING FEES RECEIVED PRIOR TO NEW STORE
OPENINGS WILL BE CARRIED FORWARD AS INCOME RECEIVED IN ADVANCE ON THE BALANCE
SHEET. THE COMPARATIVE AMOUNTS HAVE BEEN APPROPRIATELY RESTATED.
THE EFFECT OF THE CHANGE IS:
DECREASE IN NET INCOME DUE TO CHANGE IN ACCOUNTING FOR JOINING FEES:
- GROSS 7 (186) (337)
- TAXATION (2) 56 101
- NET 5 (130) (236)
RESTATEMENT OF OPENING RETAINED EARNINGS IN RESPECT OF PRIOR YEAR ADJUSTMENT:
- GROSS 296 633 633
- TAXATION (89) (190) (190)
- NET 207 443 443
REGISTERED OFFICE 478 JAMES CRESCENT HALFWAY HOUSE 1685 (PO BOX 2884
HALFWAY HOUSE 1685)
TELEPHONE (011) 315 3000 FAX (011) 315 0059 E-MAIL
INVESTORRELATIONS@STEERS.CO.ZA
WEBSITE ADDRESS WWW.STEERSHOLDINGS.CO.ZA
TRANSFER SECRETARIES COMPUTERSHARE SERVICES LIMITED (REGISTRATION NUMBER
1958/003546/06)
4TH FLOOR EDURA HOUSE 40 COMMISSIONER STREET JOHANNESBURG 2001
(PO BOX 62391 MARSHALLTOWN 2107)
DIRECTORS P HALAMANDARIS (CHAIRMAN) T HALAMANDARIS (MANAGING DIRECTOR) JL
HALAMANDRES (DEPUTY CHAIRMAN) JW HAMILTON HR LEVIN* DH PAPPADOPOULOS N
STOKES S TRIAND*+
* NON-EXECUTIVE + AMERICAN
THE LEADING MARKETER AND DEVELOPER OF BRANDED FAST FOOD CONCEPTS ON THE
AFRICAN CONTINENT
STEERS ANNOUNCES INTERIM RESULTS
PRESS RELEASE
18 OCTOBER 2000
STEERS HOLDINGS TODAY REPORTED UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS
ENDED 31 AUGUST 2000.
OPERATING PROFIT IS UP 9% FROM R10,2 MILLION TO R11,1 MILLION FOR THE SIX-MONTH
PERIOD, WITH HEADLINE EARNINGS PER SHARE SHOWING A DECREASE OF 10% (10.6 CENTS)
ON A GROSS REVENUE INCREASE OF 4% FROM R123,6 MILLION TO R128,7 MILLION.
JOHN HALAMANDRES, DEPUTY CHAIRMAN OF STEERS HOLDINGS, COMMENTS: "DURING THE SIX
MONTH PERIOD UNDER REVIEW, THE GROUP CONTINUED TO HOLD THE NUMBER ONE POSITIONS
IN THE SOUTH AFRICAN HAMBURGER AND PIZZA MARKETS. THE LOWER THAN EXPECTED GROSS
REVENUE WAS PRIMARILY DUE TO DELAYS IN NEW STORE OPENINGS, WHICH ARE NOW
SCHEDULED FOR THE FOLLOWING SIX MONTHS, AND REDUCED CONSUMER SPENDING".
DURING THE SIX MONTHS UNDER REVIEW, THE GROUP ACQUIRED OCEAN BASKET'S 49% STAKE
IN FISHAWAYS, MAKING FISHAWAYS A WHOLLY-OWNED SUBSIDIARY. A FURTHER 5 FISHAWAYS
OUTLETS ARE EXPECTED TO BE OPENED DURING THE CURRENT FINANCIAL YEAR. IN LINE
WITH STEERS HOLDINGS' POLICY OF REDUCING THE NUMBER OF GROUP-OWNED STORES,
THREE SUCH STORES WERE SOLD TO FRANCHISEES.
DURING THE SIX-MONTH PERIOD ENDING 31 AUGUST 2000, 11 STEERS AND 13 DEBONAIRS
PIZZA FRANCHISED OUTLETS WERE OPENED. THE GROUP CURRENTLY HAS A TOTAL OF 420
FRANCHISED OUTLETS THROUGHOUT THE AFRICAN CONTINENT.
HALAMANDRES IS CONFIDENT THAT THE COMBINATION OF NEW STORE OPENINGS THAT WILL
TAKE PLACE IN THE SECOND HALF OF THE FINANCIAL YEAR, AND THE INCREASED TRADING
ACTIVITIES OVER THE FESTIVE SEASON, WILL RESULT IN THE GROUP SHOWING POSITIVE
EARNINGS GROWTH FOR THE YEAR ENDING 28 FEBRUARY 2001.
ENDS
WRITTEN AND DISTRIBUTED BY : ARCAY FINANCIAL COMMUNICATIONS
ON BEHALF OF : STEERS HOLDINGS
FURTHER INFORMATION : GAYLE BARBOUR-RODRIGUES
TEL : 27 11 480 8573
FAX : 27 11 480 8556
CELL : 083 307 6484
E-MAIL : BARBG@ARCAY.CO.ZA
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