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HOLDSPORT LIMITED - Unaudited interim consolidated results for the half-year ended 31 August 2012

Release Date: 09/10/2012 15:30
Code(s): HSP     PDF:  
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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