Wrap Text
Unaudited interim consolidated results for the half-year ended 31 August 2012
Holdsport Limited
Registration number: 2006/022252/06
Share code: HSP
ISIN: ZAE000157046
("Holdsport" or "the company" or "the group")
UNAUDITED INTERIM CONDENSED CONSOLIDATED RESULTS FOR THE HALF-YEAR ENDED 31 AUGUST 2012
SALES
- UP 9.9% TO R601.2 MILLION
OPERATING PROFIT
- UP 1.2% TO R90.8 MILLION
CORE HEADLINE EARNINGS PER SHARE
- DOWN 1.3% to 157.1 CENTS
INTERIM GROSS DIVIDEND
- UP 70 CENTS PER SHARE
GROUP OVERVIEW
The Holdsport Limited group comprises the retail divisions Sportsmans
Warehouse and Outdoor Warehouse and Performance Brands, a
wholesale business that includes the First Ascent and Capestorm brands.
The group delivered a satisfactory result for the period under review with
total sales increasing by 9.9% to R601.2 million. Retail sales increased
by 9.2% to R572.0 million.
Operating profit increased by 1.2% to R90.8 million. In evaluating this
performance shareholders should take the following factors into account:
- The preceding two comparative reporting periods coincided with a
football and rugby world cup respectively. This resulted in a strong
performance from replica apparel during these periods, which was
not repeated during the current period.
- The accounting treatment of foreign exchange denominated
transactions coupled with the volatile Rand/Dollar exchange rate results
in a non-cash income or expense at the end of every reporting period
which is partly included in cost of sales and partly recognised as foreign
exchange gains or losses within trading expenses. During the current
period the aggregate adjustment was an expense of R2.5 million
compared to an aggregate profit of R2.8 million during the prior period.
The majority of the adjustment is included in cost of sales.
Core headline earnings amounted to 157.1 cents per share. An interim
gross dividend of 70.0 cents per share has been declared in line with the
dividend policy of the group which is to have dividends covered twice by
core headline earnings.
TRADING DIVISIONS
Sales for the various trading divisions were as follows:
Increase
Number of Sales in sales
stores R'm %
Sportsmans Warehouse 34 432.5 10.3
Outdoor Warehouse 18 139.5 6.0
Retail sales 52 572.0 9.2
Performance Brands 29.2 25.7
Total sales 52 601.2 9.9
Like-for-like retail sales grew by 7.8% while the retail divisions experienced
price inflation of approximately 2.2% for the period. The time weighted
trading area increased by 1.4% relative to the prior corresponding period.
The Sportsmans Warehouse division added the Capestorm store
in Wynberg, expanded its Fourways store and relocated the store in
Polokwane. Like-for-like sales increased by 8.4%. Sportsmans now trades
out of 34 stores, and will open two new stores in the second half of the year.
The Outdoor Warehouse division currently comprises 18 stores and
will open a further store in the second half of the year. Like-for-like sales
increased by 6.1%.
Performance Brands achieved external sales of R29.2 million, an
increase of 25.7%.
CAPITAL EXPENDITURE
During the period the group:
- purchased the Capestorm trademark for R8.0 million and related
inventory for R11.1 million;
- acquired the Performance Brands premises for R12.0 million;
- incurred R19.7 million in maintaining and expanding its retail
operations and anticipates spending R24.7 million in the second half
of the year; and
- approved a capital expenditure programme amounting to R58.0 million
to expand its distribution capacity, of which approximately R18.0 million
will be incurred in the second half of this year and R40.0 million
next year.
FORFEITABLE SHARE PLAN
During the period, the group purchased and awarded R13.4 million
of Holdsport shares in terms of and subject to the rules of the 2011
Holdsport Forfeitable Share Plan ("FSP").
The forfeitable share plan is expensed over the vesting period and the
R1.9 million expensed for the current period was R1.5 million higher than
the prior period.
PROSPECTS
The group earns the greater part of its profits in the second half of the year.
As always, the second half is heavily dependent on Christmas trading,
which will largely determine the performance of the group for the year.
The group signed lease agreements for a further two new stores to be
opened in the next financial year and are evaluating other opportunities.
INTERIM DIVIDEND ANNOUNCEMENT
The directors declared an interim gross dividend of 70.0 cents per
share payable on Monday, 3 December 2012 to ordinary shareholders
recorded in the books of the company at the close of business on Friday,
30 November 2012.
The last day to trade ("cum" the dividend) in order to participate in the
dividend will be Friday, 23 November 2012. The Holdsport Limited
ordinary shares will commence trading "ex" the dividend from the
commencement of business on Monday, 26 November 2012 and the
record date, as indicated, will be Friday, 30 November 2012.
Ordinary shareholders should take note that share certificates may
not be dematerialised or rematerialised during the period Monday,
26 November 2012 to Friday, 30 November 2012, both dates inclusive.
In terms of the withholding tax on dividends which became effective on
1 April 2012, the following additional information is disclosed:
- the dividend has been declared out of total reserves;
- the South African dividend tax rate is 15%;
- there are no STC credits utilised;
- the net local dividend amount is 59.5 cents per ordinary share for
shareholders liable to pay the new dividend tax, and 70.0 cents per
ordinary share for shareholders exempt from the new dividend tax;
- the issued share capital of Holdsport at the date of declaration is
43 150 220 ordinary shares; and
- Holdsport's tax reference number is 9618595152.
Certificated ordinary shareholders are reminded that all entitlements to
dividends with a value less than R5.00 per certificated shareholder will be
aggregated and the proceeds donated to a registered charity of the directors'
choice, in terms of the memorandum of incorporation of the company.
Signed on behalf of board
S Muller K Hodgson
(Chairman) (CEO)
Cape Town
8 October 2012
Condensed Consolidated Statements of Financial Position
31 August 31 August 29 February
2012 2011 2012
Unaudited Unaudited Audited
R'000 R'000 R'000
Assets
Non-current assets
Plant and equipment 70 567 44 554 51 903
Investments
Goodwill and other intangibles 639 780 644 360 638 083
Total non-current assets 710 347 688 914 689 986
Current assets
Inventories 323 852 247 828 296 723
Trade and other receivables 17 248 15 295 19 389
Taxation 8 766 8 106
Cash and cash equivalents 32 568 77 374
Total current assets 349 866 303 797 393 486
Total assets 1 060 213 992 711 1 083 472
Equity and liabilities
Capital and reserves
Share capital 229 312 229 312 229 312
Other reserves (24 857) (15 085) (13 370)
Retained earnings 527 785 443 421 515 603
Equity attributable to owners of the company 732 240 657 648 731 545
Non-current liabilities
Loans 110 351 137 817 124 841
Deferred taxation 53 852 58 944 55 595
Straight-lining lease liability 23 950 20 597 21 972
Total non-current liabilities 188 153 217 358 202 408
Current liabilities
Trade and other payables 91 762 90 148 120 562
Derivative instruments 1 582 2 382 1 095
Short-term portion of loans 27 357 25 175 25 693
Bank overdraft 19 119
Taxation 2 169
Total current liabilities 139 820 117 705 149 519
Total liabilities 327 973 335 063 351 927
Total equity and liabilities 1 060 213 992 711 1 083 472
Group Segmental Analysis
Sportsmans Outdoor Performance
Warehouse Warehouse Brands Corporate Group
Unaudited Unaudited Unaudited Unaudited Unaudited
R'000 R'000 R'000 R'000 R'000
Six months ended
31 August 2012
External revenue 432 572 139 482 29 163 601 217
External interest received 139 2 139 2 279
External interest paid (3) (6 383) (6 386)
Depreciation and amortisation (8 066) (2 795) (1 400) (6 433) (18 693)
Group profit/(loss) before taxation 86 748
- Segment profit/(loss)
before taxation 77 466 21 261 15 611 (25 612) 88 726
- Straight-line leases (1 978) (1 978)
Capital expenditure 14 914 3 190 21 184 418 39 706
Segment assets 253 201 81 992 97 360 627 660 1 060 213
Segment liabilities 69 044 19 352 6 355 233 222 327 973
Six months ended
31 August 2011
External revenue 392 156 131 628 23 204 546 988
External interest received 157 1 802 1 959
External interest paid (70) (6 322) (6 392)
Depreciation and amortisation (7 744) (2 449) (990) (6 434) (17 616)
Group profit/(loss) before taxation 85 355
- Segment profit/(loss) before
taxation 71 424 21 205 13 519 (19 356) 86 792
- Straight-line leases (1 437) (1 437)
Capital expenditure 10 088 2 600 163 425 13 276
Segment assets 216 687 82 207 53 764 640 053 992 711
Segment liabilities 62 999 18 916 3 541 249 607 335 063
Year ended 29 February 2012
External revenue 896 007 299 956 47 576 1 243 539
External interest received 246 3 527 3 773
External interest paid (72) (12 873) (12 945)
Depreciation and amortisation (15 372) (4 964) (1 991) (12 844) (35 171)
Group profit/(loss) before taxation 217 259
- Segment profit/(loss)
before taxation 188 362 55 641 20 759 (44 691) 220 071
- Straight-line leases (2 812) (2 812)
Capital expenditure 23 286 7 141 501 1 286 32 214
Segment assets 230 846 94 765 69 350 688 511 1 083 472
Segment liabilities 84 639 18 550 8 643 240 095 351 927
Condensed Consolidated Statements of Comprehensive Income
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2012 2011 2012
Unaudited Unaudited Audited
R'000 R'000 R'000
Sales 601 217 546 988 1 243 539
Cost of sales (309 873) (276 258) (638 807)
Gross profit 291 344 270 730 604 732
Other income 1 813 1 439 5 094
Trading expenses (202 302) (182 381) (383 395)
Operating profit 90 855 89 788 226 431
Finance income 2 279 1 959 3 773
Finance cost (6 386) (6 392) (12 945)
Profit before taxation 86 748 85 355 217 259
Taxation (24 943) (24 122) (63 564)
Profit for the period and total comprehensive income for the
period attributable to equity holders of the company 61 805 61 233 153 695
Condensed Consolidated Cash Flow Statement
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2012 2011 2012
Unaudited Unaudited Audited
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from operations 60 070 83 995 219 514
Finance income 2 279 1 959 3 773
Finance costs (6 386) (10 148) (19 005)
Dividends paid (49 623) (20 281)
Taxation paid (37 621) (37 664) (70 181)
Net cash (outflows)/inflows from operating activities (31 281) 38 143 113 820
Cash flows from investing activities
Additions to plant and equipment (39 706) (13 178) (32 214)
Proceeds on sale of plant and equipment 751 91 601
Net cash outflows from investing activities (38 955) (13 087) (31 613)
Cash flows from financing activities
Repayment of loans (12 826) (41 825) (54 170)
Forfeitable share plan (13 431) (15 500) (15 500)
Acquisition of non-controlling interest (3 082) (3 082)
Net cash outflows from financing activities (26 257) (60 407) (72 752)
Net (decrease)/increase in cash and cash equivalents (96 493) (35 351) 9 455
Cash and cash equivalents at the beginning of the period 77 374 67 919 67 919
Cash and cash equivalents at the end of the period (19 119) 32 568 77 374
Condensed Consolidated Statement of Changes in Equity
Equity
holders
of Non-
Share Other Retained Holdsport controlling Total
capital reserves earnings Limited interest equity
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 28 February 2011 19 384 244 384 263 1 027 385 290
Acquisition of non-controlling
interest without a change in control (2 055) (2 055) (1 027) (3 082)
Capitalisation of shareholders' loans 229 293 229 293 229 293
Share-based payment reserve:
initial award (15 500) (15 500) (15 500)
Share-based payment expense 415 415 415
Total comprehensive income for
the half-year 61 233 61 233 61 233
Balance at 31 August 2011 229 312 (15 085) 443 421 657 648 657 648
Share-based payment expense 1 715 1 715 1 715
Dividends paid (20 281) (20 281) (20 281)
Total comprehensive income for
the half-year 92 462 92 462 92 462
Balance at 29 February 2012 229 312 (13 370) 515 603 731 545 731 545
Share-based payment reserve:
initial award (13 431) (13 431) (13 431)
Share-based payment expense 1 944 1 944 1 944
Dividends paid (49 623) (49 623) (49 623)
Total comprehensive income for
the half-year 61 805 61 805 61 805
Balance at 31 August 2012 229 312 (24 857) 527 785 732 240 732 240
NOTES TO THE FINANCIAL STATEMENTS
1. The unaudited interim condensed consolidated results for the half-year ended 31 August 2012 have been
prepared in accordance with the recognition, measurement, presentation and disclosure requirements of
IAS 34 Interim Financial Reporting, using the group's accounting policies that are in line with International
Financial Reporting Standards (IFRS), the Companies Act No. 71 of 2008, as amended, and the SAICA AC 500
series and have been consistently applied to prior periods.
The unaudited interim condensed consolidated results have been prepared under the supervision of the group
financial director, JP Loubser (CA(SA)).
2. These financial statements incorporate the financial statements of the company, all its subsidiaries and all
entities over which it has operational and financial control.
31 August 31 August 29 February
2012 2011 2012
Unaudited Unaudited Audited
R'000 R'000 R'000
3. Trading expenses
Depreciation on plant and equipment 12 212 11 339 22 617
Amortisation of intangibles 6 481 6 277 12 554
Occupancy cost 55 096 50 529 103 706
Straight-lining of leases 1 978 1 437 2 812
Staff costs 74 060 64 401 145 796
Foreign exchange loss/(gain) 1 851 994 (1 422)
Other operating costs 50 624 47 404 97 332
202 302 182 381 383 395
4. Finance cost
Interest paid on loans 6 386 10 148 19 005
Decrease in interest rate swap derivative (3 756) (5 949)
Fair value adjustment on loans (111)
6 386 6 392 12 945
5. Cash generated from operations
Operating profit 90 855 89 788 226 431
Adjustments for:
Depreciation 12 212 11 339 22 617
Amortisation of intangibles 1 978 1 437 2 812
Changes in working capital: 6 481 6 277 12 554
(Profit)/loss on sale of plant and equipment (98) (49) (148)
Fair value loss/(gain) on derivative instruments 487 (425) 480
Forfeitable share plan expense 1 944 415 2 130
Straight-lining lease liability
Decrease/(increase) in trade and other receivables 2 141 263 (3 831)
Increase in inventories (27 129) (15 066) (63 961)
(Decrease)/increase in trade and other payables (28 801) (9 984) 20 430
Cash generated from operations 60 070 83 995 219 514
6. Earnings per share and net asset value per share
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2012 2011 2012
Unaudited Unaudited Audited
R'000 R'000 R'000
Earnings per ordinary share (cents)
Basic 143.2 141.9 356.1
Headline 143.0 141.7 355.8
Core headline 157.1 159.2 387.4
Ordinary shares in issue ('000) 43 150 43 150 43 150
Weighted average ordinary shares in issue ('000) 43 150 43 150 43 150
Net asset value per ordinary share (cents) 1 697.0 1 523.1 1 695.3
Net tangible asset value per ordinary share (cents) 366.2 191.2 372.6
Reconciliation to core headline earnings
The group uses core headline earnings as a consistent measure of performance for management purposes.
Core headline earnings exclude exceptional once-off costs and the amortisation of trademarks, fair value
adjustments to loans and the lease straight-lining expense, and are presented below:
31 August 31 August 29 February
2012 2011 2012
Unaudited Unaudited Audited
R'000 R'000 R'000
Basic and diluted earnings 61 805 61 233 153 695
Adjusted for:
Profit on disposal of plant and equipment (71) (49) (148)
Headline earnings 61 734 61 184 153 547
Adjusted for (net of taxation):
Fair value adjustments on loans (310) (80)
Amortisation of intangibles 4 667 4 519 9 039
Straight-lining of leases 1 424 956 2 023
Non-recurring professional fees 2 363 2 661
Core headline earnings* 67 825 68 712 167 190
* In order to compare the core headline earnings per share over time for this report, earnings is divided by the
number of shares in issue at the last reporting date, being 43 150 220 shares at 31 August 2012.
7. Dividend per share
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2012 2011 2012
Unaudited Unaudited Audited
Dividend declared per share (cents)
Interim 70.0 47.0 47.0
Final 115.0
Total dividend 70.0 47.0 162.0
Dividend cover (by core headline earnings) 2.2 3.4 2.4
Holdsport Limited
("Holdsport" or "the company" or "the group")
Executive directors: KG Hodgson, EA Haarburger, JP Loubser
Non-executive directors: SA Muller (Chairman), B Hopkins, C Sonn, M Vilakazi
Company secretary: AE van Zyl
Registered office: The Mill House, 1 Canterbury Street, Cape Town 8001
Registration number: 2006/022252/06
Share code: HSP
ISIN: ZAE000157046
Transfer secretaries: Computershare Investor Services (Proprietary) Limited, Ground Floor,
70 Marshall Street, Johannesburg 2001
Sponsor: UBS South Africa (Proprietary) Limited
9 October 2012
TO VIEW THE RESULTS ON-LINE VISIT www.holdsport.co.za
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